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Rating:Could Fink Be a Market Maker's White Knight? Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, November 28, 2012

Could Fink Be a Market Maker's White Knight?

News summary by MFWire's editors

The Knight Capital Group deal saga continues, this time with a celebrity in the mix: Larry Fink. Meanwhile, two private equity-backed market makers are circling Knight. And it appears that the entirety of Jersey City, New Jersey-based Knight, not just its core market-making business, is on the block. Multiple publications expect Knight to receive bids as early as this week.

Read MFWire's living timeline for the full, ongoing story on the Knight disaster and rescue.

On Friday the Wall Street Journal reported that Knight is trying to sell its flagship market making business, which includes the second-biggest ETF market-making business. Then yesterday Charlie Gasparino of FoxBusiness reports that, according to an unnamed source, Knight chief Tom Joyce "plans to have preliminary discussions about doing a deal with money management powerhouse BlackRock [profile]." Yet FoxBusiness paints a picture of Joyce as a reluctant dealmaker who's searching for a way to keep Knight independent.

BlackRock owns the world's biggest ETF business, iShares [profile].

The initial WSJ report named two other market makers, New York-based Virtu Financial and Chicago-based Getco (one of Knight's summer saviors) as two suitors. Now Jenny Strasburg and Anupreeta Das of the WSJ report that, of the two initial bidders for Knight, Virtu is in the lead with an all-cash offer. The WSJ reports that Getco's offer is part-cash, part-stock reverse merger that would take Getco public.

Virtu's private equity backer is Silver Lake Partners, whom the WSJ sees as willing to invest in a Knight deal, and Virtu recently bought an ETF market maker in Europe. Yet the paper expects that General Atlantic, Getco's private equity backer, isn't going to put money into such a deal.

Nikolaj Gammeltoft and Nina Mehta of Bloomberg offer another wrinkle. Knight just dropped out of a KBW conference in New York scheduled for tomorrow.

Bloomberg also pulls together pricing estimates. KBW analyst Niamh Alexander valued Knight at up to $1.37 billion, i.e. $3.74 per share. Evercore Partners analyst Christopher Allen suggested $1.1 billion, i.e. $3.09 per share. Knight's shares have risen to $2.97 each. 

Edited by: Neil Anderson, Managing Editor


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