Four months after a massive trading-technology glitch that cost it nearly half a billion dollars, Knight Capital Group is on the block, say people involved with the discussions, and could be merged in to one of its chief competitors.
In recent weeks, Getco LLC and Virtu Financial have each approached Knight about the possibility of purchasing the company and merging into it, say these people—a transaction that would increase the resultant company's trading footprint considerably and enable the acquirer to go public without undertaking a traditional IPO.
Exact terms of a potential deal aren't yet clear, but Knight expects to see more detailed bids as early as this week, said one of the people familiar with the matter.
Based on Friday's share price, which preceded initial reports of a possible deal, and a premium of 30 percent to 40 percent, the value of a Knight purchase could range from $600 million to $700 million, say the two people familiar with the matter.
The deal negotiations were first reported by the Wall Street Journal.
Still, caution the people familiar with the matter, talks are at an early stage and no deal may come together at all.