A pair of trading firms announced nuptials in New York Thursday, as Virtu Financial, Inc. (NASDAQ:VIRT) entered into a definitive agreement to acquire KCG Holdings, Inc. (NYSE:KCG) in a cash transaction valued at $20.00 per KCG share, or a total of approximately $1.4 billion U.S.
The price represents a premium of 46% over KCG's closing share price of $13.73 on March 14. Goldman, Sachs is serving as the financial advisor in relation to the deal.
Virtu is a leading technology-enabled market maker and liquidity provider to the global financial markets.
KCG is a leading independent securities firm offering investors a range of services designed to address trading needs across asset classes, product types and time zones.
The deal would extend Virtu’s scaled operating model to KCG’s wholesale market making businesses and broaden the distribution of Virtu’s technology and execution services to KCG’s extensive institutional client base. Virtu expects to migrate trading of the combined company onto a single, proven technology, risk management, and analytics platform.
The transaction, expected to close during the third quarter of calendar 2017, should to provide significant further scale and financial benefits to Virtu.
Virtu said in a press release that, within two years, it expects to realize about $208 million of net pre-tax expense savings, in addition to $440 million of capital synergies, savings not including any revenue enhancements from the transaction.
Virtu shares climbed $1.35, or 9%, within minutes of the news conference announcing the deal, to $16.30. KCG shares gained $1.98 per share, or 11.2%, to $19.72.
