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BATS Agrees $365 Million Deal for Hotspot

BATS Global Markets has agreed to buy KGC Hotspot from its parent company, KGC Holdings, for $365 million in cash.

The deal, which Profit & Loss reported earlier this month (Squawkbox, 19 January), is expected to be completed in the second quarter of 2015.

Under the terms of the agreement both sides of the deal have agreed to share certain tax benefits, which could result in further payments to KCG of up to approximately $70 million in the three-year period following the close.

Upon the close, the transaction is expected to increase KCG's tangible book value by approximately $2.00 per share.

Daniel Coleman, CEO of KGC, says that the deal represents “significant” value for KGC shareholders, while simultaneously allowing the firm to focus on expanding its global FX client market making business.

"Hotspot is an innovative foreign exchange leader which will become an important part of our expanding global footprint, and we are excited to welcome their highly-regarded team to BATS Global Markets. Their FX expertise and reputation, along with our technology excellence and global presence, will make for a powerful combination and enable us to have a meaningful and significant impact on the direction of the FX market in the years to come," says Joe Ratterman, CEO of BATS.

Coleman adds: "After conducting a thorough and competitive process, it became clear that BATS is the right strategic partner for Hotspot, as well as its clients and employees. BATS and Hotspot share a commitment to technological excellence. This, coupled with the experience, resources and insights derived from operating global multi-asset class markets, ensures that BATS is well positioned to further accelerate Hotspot's growth."

galen@profit-loss.com

Profit & Loss

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