Knight Capital Group Inc. (NYSE:KCG) has two rival suitors making take over offers for it with values as high as $1.8 billion.
On Wednesday, Chicago-based Getco LLC and New York’s Virtu Financial LLC gave bids to Knight’s board of directors for the struggling company. It may have a decision by year’s end, reported the Wall Street Journal, but Getco nudged the process along after sharing its bid publicly in a letter and asking the board to come to a definitive agreement by Monday.
Blue Mountain Credit Fund still in the red YTD; here are their biggest holdings
Blue Mountain Credit Alternatives Fund was up 0.36% for November, although the fund remains well into the red for the year. For the first 11 months, the fund was down 24.85% gross. Q3 2020 hedge fund letters, conferences and more Blue Mountain's fundamental credit strategy was up 0.63% for November, including a 1.09% gain for Read More
In a cash and stock offer, Getco gave Knight Capital Group Inc. (NYSE:KCG) a $3.50 per share value; this represents an 18 percent premium from Tuesday’s close and with a cash payment, it will affect about half of the company’s outstanding shares. The deal also has Knight keeping its public listing, according to Bloomberg’s review of a Getco filing, while shareholders would receive new stock in a combined publicly-traded holding company.
This offer has Knight valued between $1.4 billion to $1.8 billion with debt, but an exact amount would come on the combined company’s share value. Getco’s letter had its Chief Executive Daniel Coleman noting the proposed deal would give “an immediate return on investment” and “opportunity to participate in the future growth of the combined company” reported the Wall Street Journal.
Currently, Getco has about a 16% share in Knight from its August investment of $87.5 million. It probably has support from another shareholder, Jefferies Group, Inc. (NYSE:JEF), with its 23% stake. The firm will support Getco’s offer via financing of $950 million.
From its $100 million investment in Knight Capital Group Inc. (NYSE:KCG), Jefferies sits as its biggest shareholder.
With a winning Getco bid, Knight’s chairman and executive Thomas M. Joyce, who has been with the company since 2002, would become the nonexecutive chairman of a combined company, and Coleman would then become CEO.
The firm’s board would have four directors nominated from previous Getco shareholders and three currently sitting on Knight’s board.
The Virtu Offer
Then there’s suitor No. 2, Virtu.
It has submitted a $3 per share bid to buy Knight, or an offer valued between $1.5 billion to $1.6 billion with debt. Shareholders would receive an all-cash payment, but it isn’t affected by the combined company’s future valuation.
Should Virtu emerge as the winner, its executives will have a small group of owners controlling the firm and in the future it will have an initial public offering.
Virtu has received financing commitments of $1 billion plus from Barclays PLC (LON:BARC) (NYSE:BCS), Citigroup Inc. (NYSE:C), and Credit Suisse Group AG (NYSE:CS), according to the Wall Street Journal, but the bid has not been made public.
In addition, Virtu could receive additional financing from two private-equity firms. This could include something from one of its investors, Silver Lake Partners.
As for the combined company’s leadership with a Virtu win, Joyce would be named CEO. At the end of the year, his four-year contract will expire at Knight and there has not been an extension agreement.
Knight Capital Group Inc. (NYSE:KCG) will supposedly review the two offers on Thursday morning.
All of this week’s action comes after the 17-year-old company had been rescued in August by six financial firms after losing $450 million-plus from a trading glitch.