Wednesday, November 28, 2012

Reuters: Global Markets: Getco bids to take control of Knight Capital

Posted by Isabella on 7:05 AM

Reuters: Global Markets
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Getco bids to take control of Knight Capital
Nov 28th 2012, 14:51

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Traders work at the Knight Capital kiosk on the floor of the New York Stock Exchange August 3, 2012. REUTERS/Brendan McDermid

Traders work at the Knight Capital kiosk on the floor of the New York Stock Exchange August 3, 2012.

Credit: Reuters/Brendan McDermid

Wed Nov 28, 2012 9:51am EST

(Reuters) - Trading firm Getco Holding Co said it offered to take control of Knight Capital Group Inc (KCG.N) in a deal that values the electronic trading firm at $3.50 a share, sending Knight shares up 15 percent in early trading Wednesday.

Knight was forced to take on new investors following a software glitch on August 1 that unleashed a flood of orders to the New York Stock Exchange, resulting in a massive position Knight had to unload at a loss, pushing it to the brink of bankruptcy.

Sources familiar with the situation have said Getco and Virtu Financial LLC were interested in Knight for its market-making operation. Knight, which uses computer models to match buy and sell orders in stocks and options, executes around 10 percent of U.S. volume.

The Getco offer was disclosed in a filing with the U.S. Securities and Exchange Commission. The filing included an offer letter to Knight directors dated Wednesday.

Getco already owns 23.8 percent of Knight's stock, according to the filing.

Getco said its offer of $3.50 a share is a 41 percent premium over Knight's closing price on November 23, the day before press reports of rumors of possible offers for Knight. It said its offer was a 7.4 percent premium over Knight's tangible book value.

Knight shares were up 46 cents to $3.43 in early trading on the New York Stock Exchange.

The deal would add Knight's consumer franchise to Getco's industry technology, the letter said. The combined company would be a market-maker and an agent for trades across a range of markets and assets, Getco said.

(Reporting By David Henry in New York; Editing by Gerald E. McCormick and John Wallace)

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