[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / March 17, 2017 / Active Wall St. blog coverage looks at the headline from Virtu Financial Inc. (NASDAQ: VIRT) and KCG Holdings Inc. (NYSE: KCG). High speed trader KCG Holdings disclosed on March 15, 2017, that its Board of Directors has received an unsolicited offer from rival firm Virtu Financial. If the deal goes through, it will help Virtu to fortify its business, which has been affected by market volatility in recent times. Register with us now for your free membership and blog access at:
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About Virtu's proposal
Virtu has offered to buy all the outstanding shares of the Company and pay $18.50-$20.00 in cash for each KCG's share. The proposal values KCG at approximately $1.3 billion. Virtu officially confirmed that it had made an offer to acquire KCG and its Company statement read:
"While we typically do not as a matter of policy comment about Virtu's merger and acquisition activities, following yesterday's press release by KCG Holdings, Inc. we can confirm that Virtu made a preliminary, non-binding proposal to acquire KCG. There are no assurances that any transaction will result from this proposal and Virtu does not intend to make any additional comments regarding this matter at this time."
KCG's Board is currently reviewing Virtu's offer and is conferring with its legal and financial advisors as to the implication of the offer on its future plans and if it helps in value creation for its shareholders. KCG has not shared any other details on the matter.
About the two rivals
KCG Holdings
New York based KCG was founded in 2013 and is an emerging, independent, pure-play, technology-driven Company that undertakes high-frequency trading, electronic execution, institutional sales and trading, and market making. It has multiple access points which enable it to trade in global equities, fixed income, options, currencies and commodities. On March 14, 2017, KCG disclosed its trade volumes for the month of February 2017. In market making the firm's averaged volume trade was approximately $28 billion which included trading of 10.9 billion shares and 3.4 million trades per day in US equities. The volumes for January 2017 were also on similar lines. In market making the firm's averaged volume trade was approximately $28.1 billion which included trading of 8.9 billion shares and 3.5 million trades per day in US equities.
In September 2016, KCG completed the acquisition of Stockholm, Sweden-based independent agency broker, Neonet Securities AB. The acquisition was aimed at expanding KCG's footprint in continental Europe
Virtu Financials
Founded in 2008, Virtu is also based in New York and has trade floors and development groups in North America, Europe and Asia. It is a global leader in electronic market making and operates on a number of exchanges, markets, and markets and liquidity pools. At the core of Virtu's success is its innovative, proprietary technology that is designed to automate market making and post-trade activities.
In February 2017, Virtu released its financial results for Q4 and FY 2016 for the period ending on December 31, 2016. The Company reported net income of $34.9 million for the quarter and $158.5 million for the full year. Its basic and diluted EPS for the quarter was $0.22 versus EPS of $0.88 for the full year. The Company's total revenues were $170.6 million for the quarter and $702.3 million for the full year.
Trading firms are struggling due to chronic low volatility in markets. The recent price war amongst e-trading players with regards to reducing of trading commissions is indicative of the changing market scenario. It is an indication that there are more players than customers. To survive in these volatile market conditions of high supply, low demand, and expensive technological upgrades, one can expect more consolidation amongst the traders in the future.
Stock Performance
At the close of trading session on Thursday, March 16, 2017, Virtu Financial's share price finished yesterday's trading session at $16.65, slightly down 0.60%. A total volume of 2.38 million shares exchanged hands, which was higher than the 3 months average volume of 493.75 thousand shares. The stock has advanced 5.18% and 3.21% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have gained 5.84%. The stock is trading at a PE ratio of 18.52 and has a dividend yield of 5.77%. At Thursday's closing price, the stock's net capitalization stands at $2.31 billion.
On Thursday, KCG Holdings' stock closed the trading session at $17.98, jumping 6.39% from its previous closing price of $16.90. A total volume of 6.62 million shares have exchanged hands, which was higher than the 3-month average volume of 479.60 thousand shares. KCG Holdings' stock price soared 25.73% in the last month, 29.35% in the past three months, and 25.73% in the previous six months. Furthermore, on a year to date basis, the stock surged 35.70%. Shares of the company have a PE ratio of 5.73 and currently have a market cap of $1.19 billion.
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