Cerberus Capital Management LP is currently in talks to join Virtu Financials’ bid for Knight Capital Group Inc. (NYSE:KCG). According to the journal, Sources familiar with the matter reveal that the talks are indeed in progress, despite the lack of a conclusive agreement. Cerberus’ involvement in Virtu’s bid will add another deep-pocketed investor to a growing list of investors like Credit Suisse Group AG (NYSE:CS) and Silver Lake Partners.
Although there are many firms struggling to ink a deal with Knight Capital, Virtu and its rival Getco Holding have been the most recurrent names all through, making headlines last week following a meeting with the Knight’s board. Both companies have valued Knight Capital at a minimum of $1.1 billion, with Getco said to have a higher bid of $3.5 a share compared with Virtu’s $3 billion. Sources close to the matter however, revealed that Virtu’s deal is all cash while Getco’s deal is cash and stock.
Knight Capital Group Inc. (NYSE:KCG) became open to a takeover after a fatal trading glitch in summer. At the wake of the glitch, everything went south and the company bordered on bankruptcy before some investors came to the rescue with $400 million in emergency capital.
Well placed sources revealed that Knight Capital Group Inc. (NYSE:KCG)’s board met again on Monday. Nevertheless, the board did not arrive at anything conclusive and the bidding war will still stretch out into the coming days. The sources further added that Knight’s directors are weighing Virtu’s all-cash offer that values the firm between $1.5 billion to $1.6 billion. Virtu’s all-cash deal not only provides quicker rewards, but it also presents the incentive of swallowing Knight’s debt and combining the two businesses into one privately held firm.
Despite the heated bidding war, the sources still maintain that Knight’s directors may consider keeping the company independent. Notwithstanding, this will compel the directors, and more importantly the management, to go back to the drawing board following the company’s bulging losses of $389.9 million in the third quarter.