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Getco, Virtu Financial Make Rival Bids for Knight Capital

CNBC.com With Wires
Wednesday, 28 Nov 2012 | 8:42 AM ET

Getco n Wednesday made an offer to acquire Knight Capital Group for $3.50 a share in cash and stock, four months after a massive trading-technology glitch cost the trading firm nearly half a billion dollars.

Jin Lee | Bloomberg | Getty Images

In a letter to City, N.J.-based Knight, Getco said the acquisition would involve a two-step process in which 242 million new shares would be issued, followed by a tender offer for an additional 154 million shares.

Getco already owns about 31 percent of Knight's outstanding shares.

Getco, in a regulatory filing said that CEO Daniel Coleman would lead the new company, and Knight CEO Tom Joyce would become non-executive chairman.

Virtu Financial, meanwhile, submitted an all-cash offer for Knight that would pay shareholders $3 upfront and would transform Knight into a privately-owned company combined with Virtu, according to a source familiar with the situation. The source described the discussions with Knight as "fluid."

Uncertainty has hung over Knight since an Aug. 1 trading glitch caused the company to take on a slew of unwanted positions in stocks, in both purchases and short sales. Knight's Joyce managed to sell off the erroneous purchases quickly, but was ultimately left holding $460 million in losses.

In the aftermath of the glitch, the Securities and Exchange Commission pened an investigation into what went wrong, and Knight was forced to take on a new group of investors to raise emergency financing.

Shares of Knight are surging following word of the competing offers.

—The Associated Press and CNBC's Kate Kelly contributed to this article

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