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Getco Holding and Knight Capital Group agree to merge operations

US based electronic trading firm Getco Holding has agreed to acquire Knight Capital Group, in a cash-and-stock deal, valued at $1.4bn.

The aforesaid purchase price represents a 51% premium to Knight’s closing share price on 23 November 2012.

As per terms of the agreement, both firms will integrate their operations and will form a new global financial services firm providing agency brokerage for clients globally.

Existing Knight shareholders (other than GETCO) will receive $3.75 per share in cash or one share of common stock of the new holding company.

GETCO members will receive 233 million shares of the new enterprise, while the 57 million shares of Knight currently owned by GETCO will be retired.

After closing of transaction, GETCO chief executive officer Daniel Coleman will assume the same role, while Knight chairman and chief executive officer Thomas Joyce will become executive chairman of the board of directors.

Once the transaction is completed in the second quarter of 2013, pending shareholder and customary regulatory approvals, current Knight chief financial officer Steven Bisgay will continue in same capacity for the merged company.

Sandler O’Neill & Partners and Jefferies & Company served as the financial advisor to Knight and Getco, respectively.

Wachtell, Lipton, Rosen & Katz offered legal advice to Knight, while Sullivan & Cromwell provided legal advice to Getco.