Just a few months after a trading software glitch threatened its shutdown, Jersey City-based Knight Capital Group Inc. today announced it will be acquired by Chicago-based Getco Holding Co. LLC for $1.4 billion in cash and stock.
Under the terms of the buyout, Getco will receive 233 million shares of the combined company, while its existing 57 million shares of Knight will be retired.
Getco has offered current Knight shareholders either $3.75 per share in cash or one share of stock in the new publicly traded holding company.
Knight Chairman and CEO Thomas M. Joyce, who will serve as executive director of the new company's board after the merger is completed, said in a statement Getco's takeover "provides the best possible value creation opportunity for Knight's shareholders … (with) near-term certainty in the form of cash, while also allowing shareholders to benefit from participation in the future success of the firm."
The offer reflects a 13 percent premium to its Tuesday closing price of $3.33 per share. The day before the firm lost $461.1 million from its meltdown on Aug. 1, Knight's stock traded at $10.33 per share.
In a statement, Getco CEO Daniel Coleman said the merger "will create a powerful, dynamic firm with an unmatched ability to deliver results for clients," noting Knight offers "industry-leading services" as a top electronic trading brokerage firm.
Getco's principal investor, General Atlantic, and affiliates of Jefferies & Co. Inc. — who became Knight's largest shareholders after their emergency cash infusion with a group of other Wall Street firms helped rescue the company in August — have agreed to help finance the purchase. General Atlantic will invest more than $400 million in the new combined company.
Pending shareholder and regulatory approvals, the deal is expected to close in the second quarter of 2013.