Knight Capital OKs Takeover Offer, Ending Trading-Slip Saga

Tuesday, 18 Dec 2012 06:31 PM

 

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Knight Capital Group Inc.’s board accepted a takeover bid from Getco LLC, ending a four-month saga that began when a computer error sent the firm to the edge of bankruptcy, two people with direct knowledge of the matter said.

The acquisition will end the 17-year independence of Knight, a company whose rise paralleled the explosion in electronic trading in American stock markets. Joining with Getco will expand its reach beyond U.S. equities, creating a worldwide market maker in bonds and currencies as well as stocks.

Getco’s cash and stock offer beat out a bid from Virtu Financial LLC, a competing market maker whose all-cash bid was below Knight’s share price. In accepting Getco, directors of the company led by Chief Executive Officer Thomas Joyce chose a transaction that depends in part on the market’s view of a closely held suitor’s value.

Knight was bailed out by six financial firms including Getco in August after losing more than $450 million in a trading malfunction. Other firms that provided capital to Knight in August included Blackstone Group LP, brokerages Stifel Nicolaus & Co. and TD Ameritrade Holding Corp. and investment banks Stephens Inc. and Jefferies Group Inc. Virtu does not have a stake in the company.

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