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Getco makes Knight Capital bid

28 November 2012  |  4594 views  |  0 Stock exchange numbers

High Frequency trading firm Getco has made a $3.50 a share offer for Knight Capital Group, which it helped rescue from bankruptcy over the summer.

Getco's cash and stock offer - valuing Knight at around $1 billion and an 18% premium on yesterday's closing price - would see the firm retain its public listing.

According to Bloomberg, the deal would be a two-step reverse merger: Getco would receive 242 million newly issued shares and warrants to buy 69 million more before making a tender offer for up to 154 million Knight shares at $3.50.

Getco's existing stake in Knight - about 57 million shares, or 24% - would be retired.

The holding was acquired in August when Getco joined six other firms in a $400 million bailout of Knight after a bungled trading software update affected its algorithms and sent prices in stocks haywire, costing the market maker $440 million and bringing it to the edge of bankruptcy.

In a letter, Daniel Coleman, CEO, Getco, says: "The combined company would be a leader in market-making and agency execution. The integration of our firms' operations would generate substantial earnings accretion going forward."

Coleman is widely expected to face competition though, with a second offer predicted to come from trading firm Virtu Financial later this week.

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