Getco has made a cash-and-stock bid for the troubled trading firm Knight Capital that it values at $3.50 per share.
The news sent Knight shares soaring almost 20 percent, exceeding the offering price, before the market opened Wednesday.
In a letter to Knight Capital's board and its CEO, Getco said the acquisition would involve a two-step process in which 242 million new shares would be issued, followed by a tender offer for an additional 154 million shares.
Getco already owns about 31 percent of Knight's outstanding shares.
News of the offer comes just days after The Wall Street Journal reported that Knight had spoken to at least two rivals that are interested in buying its market-making business and expected to receive proposals this week.
Knight takes stock trading orders from big brokers like TD Ameritrade and E-Trade. It routes the orders to exchanges including the New York Stock Exchange.
On Aug. 1, Knight sent numerous erroneous orders in 140 stocks listed in the New York Stock Exchange. Those orders were behind some sudden swings in stock prices and surging trading volume. The company said the problem triggered when it installed new trading software. The company's stock price plunged about 75 percent in two days and it teetered near collapse.
Later Knight Capital Group Inc., based in Jersey City, N.J., accepted a $400 million infusion of cash, essentially selling control of the firm to a group of financial firms that was led by the Jefferies Group and included Getco.
Getco Holding Co., based in Chicago, said in its letter that its CEO, Daniel Coleman, would lead the new company, and Knight CEO Tom Joyce would become non-executive chairman. Knight on Wednesday postponed its investor meeting set for Monday,.
Knight shares rose 54 cents to $3.51 in premarket trading.
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