Getco on Wednesday offered to buy the Knight Capital Group in a deal that values the firm at about $635 million, three months after it helped rescue the trading concern from the brink of bankruptcy.
The buyout bid is one of at least two expected for Knight this week, with a second offer expected from another trading firm, Virtu Financial. Both companies are keenly interested in Knight's market-making trading operations, though they may sell less-desirable parts of their rival.
Under terms outlined in a letter to Knight's board on Wednesday, Getco proposed offering both cash and stock in a deal valued at about $3.50 each.
Getco's chief executive, Daniel Coleman, would hold that title in the combined company. Knight's own chairman and chief executive, Thomas Joyce, would become nonexecutive chairman.
“I am convinced that this merger would unlock tremendous value for the shareholders of both firms while establishing a global leader in market-making a nd agency execution,†Mr. Coleman wrote in the letter.
Getco said that it has lined up $950 million in financing from “a large financial institution.â€
Shares in Knight leaped more than 19 percent in premarket trading on Wednesday, to $3.54. That suggests that investors expect a higher takeover bid from Getco or another suitor.
