Today’s release of
Virtu’s financials, as well as the deal it has signed with JP Morgan, probably
make this the appropriate time to share my thoughts on the non-bank market
making sector in general, in particular the value ...
Broker dealer KCG Holdings has confirmed it has received an “unsolicited” offer from rival firm Virtu Financial to take over the company.
According to a statement from the firm Virtu is offering between $18.50 and $20 per share, which would value the firm at an estimated $1.3 billion.
In a statement, KCG says its board of directors “is reviewing, in consultation with its financial and legal advisors, Virtu's proposal in the context of KCG's strategic plans to create shareholder value”.
Just a little more than a year after Virtu Financial acquired KCG Holdings, sources say the firm has been in talks since April with ITG about acquiring the tech provider. Virtu, like some of its nonbank rivals, has recently focussed on building its own client-centred business. Virtu’s acquisition of KCG last year brought with it established direct to client market making relationships, and ITG is expected to broaden the client type. Virtu declines to comment on the rumoured acquisition, but as some sources point out, Virtu’s top executives – CEO Doug Cifu and CFO Joseph Molluso – each have deep backgrounds in M&A.
FX market structure changes are behind a change in approach on the part of several non-bank market makers, and the direction of travel is very much the mainstream.
“The market structure has changed and our model has definitely changed with it,” said Laine Litman, head of Virtu Financial’s customised and disclosed liquidity offerings in FX and fixed income, in kicking off the second panel on liquidity provision at Profit & Loss Forex Network Chicago. “What liquidity consumers needed two or three years ago has changed and with that, we have had to look at our models as well as at how we interact with markets.
Virtu Financial has continued to expand its business by entering into a definitive agreement to acquire Investment Technology Group (ITG) in a cash transaction valued at $30.30 per ITG share, for a total of $1 billion. The deal has been rumoured for several months, as reported by Profit & Loss in October.
Describing what it terms as a “significant acquisition” Virtu says the deal underscores its commitment to its institutional client franchise and is a natural next step in its growth.