Knight Weighs the Virtu of Two Billion-Dollar Bids
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Thursday, November 29, 2012

Knight Weighs the Virtu of Two Billion-Dollar Bids

Two bids for Knight Capital are in, and they're now in the hands of the board.

Yesterday multiple publications reported that one of the beleaguered market maker's summer saviors, fellow market maker Getco, submitted a reverse merger offer. Now Jacob Bunge, Anupreeta Das and Jenny Strasburg of the Wall Street Journal report that rival bidder Virtu, another market maker already rumored to be in the running, submitted its bid yesterday, too. According to the pub, Knight's board is weighing the bids at a meeting this morning, after Getco public disclosed its bid and asked for quick consideration and an "exclusivity agreement."

Knight Capital is the second-biggest ETF market maker.

The WSJ estimates that Getco's deal, which includes upfront cash of $3.50 each for about half the outstanding shares, values Knight at $1.4 billion to $1.8 billion, while Virtu's all-cash $3 per share offer values Knight at $1.5 billion to $1.6 billion.

Getco would put its own CEO Daniel Coleman in charge post-merger, while pushing Knight chief Thomas Joyce into the non-executive chairman role. Unnamed sources told the paper that Virtu would put Joyce in charge if they win.

The paper notes that Jefferies Group agreed to put up to $950 million in financing behind Getco's offer. Getco owns 16 percent of Knight and Jefferies owns 23 percent, making it Knight's biggest shareholder.

Unnamed sources told the WSJ that Barclays, Citigroup and Credit Suisse have committed to more than $1 billion in financing for Virtu's bid. And those sources said two private equity firms, including Virtu backer Silver Lake Partners, are also discussing supporting Virtu's bid.

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