BREAKING NEWS FROM CNBC’S KATE KELLY: TRADING FIRMS GETCO, VIRTU PURSUING PURCHASE OF KNIGHT CAPITAL
WHEN: Today, Monday, November 26, 2012
WHERE: CNBC's "Fast Money Halftime Report"
Following is the unofficial transcript of breaking news from CNBC's Kate Kelly. All references must be sourced to CNBC.
SCOTT WAPNER: WE HAVE SOME BREAKING NEWS NOW ON KNIGHT CAPITAL GROUP WITH CNBC'S KATE KELLY. AND KATE, THE STOCK AS I SEE, IS UP ELEVEN PERCENT TODAY.
KATE KELLY: THAT'S RIGHT SCOTT AND I'VE JUST LEARNED THAT DESPITE REPORTS THAT KNIGHT CAPITAL GROUP'S MARKET MAKING BUSINESS IS ON THE BLOCK, IT IS NOT IN FACT. THE WHOLE COMPANY IS. KNIGHT HAS BEEN FIELDING OFFERS FROM AT LEAST TWO OF ITS COMPETITORS TO POSSIBLY BUY IT AND NOW THESE INVESTORS, GETCO LLC AND VIRTU FINANCIAL, WHO GOT INVOLVED WITH IT THIS PAST SUMMER, TO BUY IT OUTRIGHT AND THEN MERGE THEIR BUSINESSES INTO IT. THUS, GOING PUBLIC THEMSELVES. A SCENARIO LIKE THAT WOULD EXPAND GETCO OR VIRTU'S FOOTPRINT IN ELECTRONIC TRADING DRAMATICALLY WHILE OFFERING ESSENTIALLY A BACKDOOR IPO FOR EACH OF THEM. WHILE THE EXACT TERMS OF A POTENTIAL DEAL ARE NOT YET CLEAR, PEOPLE FAMILIAR WITH THE MATTER TOLD ME TO THINK ABOUT IT AS A $600 MILLION TO SAY $700 MILLION PROPOSITION. GIVEN FRIDAY'S STOCK PRICE OF ABOUT $2.50, BEFORE WORD OF A POSSIBLE DEAL SHOT SHARES WAY UP TODAY AS YOU MENTIONED, AND WITH A PREMIUM OF LET'S SAY 30 OR 40 PERCENT PUT ON TOP. THE FUTURE OF CURRENT KNIGHT CHIEF TOM JOYCE UNDER ONE OF THOSE SCENARIOS ISN'T YET CLEAR. JOYCE'S CONTRACT IS UP AT THE END OF THIS YEAR AND AT LEAST ONE PERSON INVOLVED IN THE TALKS TOLD ME THAT GETCO OR VIRTU WOULD BE UNLIKELY TO KEEP HIM ON TO RUN THE COMBINED COMPANY IF IT CAME TO THAT. HOWEVER, THAT IS VERY MUCH IN QUESTION I'M TOLD BY SOMEONE ELSE WHO IS INVOLVED AND NEW OWNERS MIGHT WANT TO KEEP HIM INVOLVED IN THE MIX IN A SENIOR ROLE OF SOME SORT. AND THERE IS NO GUARANTEE THAT ANY DEAL WILL ACTUALLY HAPPEN, SCOTT. IT IS ALL YET ANOTHER TWIST ON WHAT HAS BEEN A VERY TOUGH YEAR FOR THE JERSEY CITY MARKET MAKER WHICH LOST $460 MILLION TO A TECHNOLOGY SNAFU IN AUGUST AND HAS BEEN TRYING TO REGROUP EVER SINCE.
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