Knight Capital Group Completes Merger with Getco

Knight Capital Group (NYSE: KCG), parent company of Urban Financial, has completed a deal to merge with electronic trading firm Getco, the companies stated today in a filing with the Securities and Exchange Commission. Original estimates valued the deal at $1.4 billion with Knight shareholders receiving a cash buyout at $3.75 per share.

The two companies have been combined as part of KCG Holdings, Inc., a new publicly traded holding company.

The deal, originally announced December and restated in April, was approved by stockholders and unitholders of both companies in June.

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“We’re pleased to announce the completion of a merger that brings together the exceptional talent of each business to create a leading global securities firm. KCG will connect investors and markets worldwide through agency execution, market making, and the operation of multi-asset class trading venues,” said Daniel Coleman, now CEO of KCG, in a statement. “As one KCG, our focus is on strategically blending human capital with superior technology to create flexible solutions that meet our clients’ evolving needs.”

The new corporate identity will launch July 2, according to the statement, including a new website and brand as well as a combined NYSE Designated Market Maker unit. In the short term, changes to current products and services are expected to be limited, the companies said. Business will remain “as usual,” for Knight’s reverse mortgage arm.

“Urban Financial Group is a subsidiary of the new combined entity,” a company spokeswoman told RMD. “The merger does not affect our business or processes. Our employees and customers will not be impacted by the merger and we are operating business as usual.”

Knight announced last week it had completed the sale of its bond-trading unit to Stifel Financial Corp.

Written by Elizabeth Ecker

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  • While this is the deal Knight was looking for, Fitch Ratings reports that while revenues and profits of the combined companies will be good if not very good, they face short-term cash shortages if the Knight shareholders choose cash over issuance of stock. If they do not, this could be a strong acquisition for both companies.

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