Virtu Preparing All-Cash Counter for Knight FBN
November 28, 2012
Virtu Financial is preparing to make an all-cash offer for Knight Capital worth at least $3 a share, Fox Business News has reported.
Among other benefits: The combined company’s affairs would be private, noted KOR Trading president Christopher Nagy.
In the pending proposal from Virtu, according to Fox reporting:
• Tom Joyce would be CEO of the combined Virtu and Knight organization. The Knight CEO would be a nonexecutive chairman, in a merger with GETCO.
• Virtu CEO Vincent Viola will be chairman of the combined company.
• Douglas Cifu will continue as president and chief operating officer.
• Former New York Stock Exchange chief Dick Grasso is acting as “unofficial adviser”
Knight Capital declined comment.
Virtu has not commented.
Even if an all-cash offer, in hand, is at first seen as superior to GETCO’s two-step offer, which involves issuance of shares and then $539 million of payments to existing shareholders, the acquisition of Knight “is all GETCO’s to lose,’’ said Nagy, the so-called “King of Retail” at T.D. Ameritrade before launching KOR this year.
GETCO, he said Wednesday, “will be aggressive” in pursuing Knight, because it has next-generation technology for making electronic markets that can use Knight’s network for pulling in order flow effectively. He called it the kind of “transformation” that GETCO chairman Daniel Coleman has been seeking.
Virtu also acts as an electronic market maker, however, and last year bought the market-making unit of Cohen Capital Group. Virtu has talking to Knight about a possible combination since August.
That’s when a series of investors, including GETCO, rescued Knight, after a technical snafu cost it $547.6 million in backing mistaken orders. At that time, Knight sold 70% of shareholders’ equities to the new backers, led by Jefferies & Co.