Virtu Financial (NASDAQ: VIRT) has agreed to acquire rival high-frequency trading platform KCG (NYSE: KCG) for $1.4 billion in cash. At $20 per share, the deal represents a 12.7% premium to KCG’s closing price Wednesday. The combination will help the companies improve scale and find cost efficiencies in an environment with increasingly tight margins, as more and more investors begin to branch into electronic trading.
Virtu’s stock shot up more than 10% on Thursday while KCG’s gained over 11%.
The deal represents Virtu’s fourth overall since the start of 2011 and its second strategic M&A transaction, according to the PitchBook Platform. In the same span, strategic acquirers have completed 1,100 fintech deals, per PitchBook data. But acquisitive activity in the highly competitive space has cooled a bit since a peak of 79 deals in 3Q 2015, dropping to 43 completed transactions during 1Q 2017.
PitchBook subscribers can check out the full data on M&A in the fintech sector right here.
Article by PitchBook