Knight Capital Receives Buyout Bid From Getco LLC

Knight Capital Group (NYSE: KCG) received a merger offer Wednesday from trading competitor Getco LLC. The offer reportedly values the company at $635 million and would include the purchase of company shares at $3.50 per share.

In a letter sent by Getco CEO Daniel Coleman to Knight’s board, Getco stressed the benefits such a merger would offer to stakeholders in both companies. The offer does not specify what would happen to Knight’s specific business channels, including Urban Financial Group. Coleman would assume the CEO role with Knight under the proposal.

In a statement released by Knight Wednesday the company confirmed it has received the proposal from Getco but as a matter of policy does not comment on interactions with shareholders or shareholder activities including filings.

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The offer is one of two expected this week to purchase the company, which has struggled in recent months following a trading glitch in August that led to the company’s loss of more than $440 million overnight. A capital infusion from five of its Wall Street counterparts served as a lifeline shortly afterward to keep the company solvent. Reports this week indicated Virtu was also interested in making an offer. The companies have said they will consider selling off non attractive business segments following a deal closing, according to a Wall Street Journal report.

Knight Capital purchased Urban Financial Group in a deal closed in July 2010 and has previously restated its commitment to the reverse mortgage space. Chicago-based Getco is a market-maker that provides liquidity to global online trading markets.

Knight’s shares were trading up 15% Wednesday morning over the previous day’s close.

Written by Elizabeth Ecker

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  • Would the buyers do what Bank of America and Wells Fargo did, dump origination and sell off servicing over time?  Essentially Walter Investment bought a servicing and issuing company; the origination group at RMS is just coming into its own.  

    The Genworth acquisition seems to imply that origination operations might have some value but if it does, it is not much.  Genworth paid Liberty $50 Million and Ocwen paid Genworth 44% of that amount.

  • Sure is a lot of activity in the acquisitions market place these day’s. Does this spell good news for the industry or bad news? One has to look at what the Critic said in her/his comment and take it seriously.

    Are we seeing the break up of more larger origination operations again. In short, are we seeing the surge of the smaller shops coming back into the industry?

    However, with all the regulations coming at us and the difficulties being a small shop in this environment, does that counter act what I previously said?

    Are we going to see more wholesalers and aggregater’s diving into the reverse mortgage industry and leave origination to the smaller and medium size shops?

    A lot of questions have to be lurking in the corridors. I wish the Urban’s and Genworth’s a lot of luck in there struggle’s by being tied up in the aquisision world!

    John A. Smaldone

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