BGC Partners Engages in a Hostile Takeover Attempt of GFI Group Inc

After the CME Group's takeover proposal has received continued endorsement by GFI's board of directors, BGC Partners decided to begin

BGC Partners LogoA company announcement made by global brokerage, BGC Partners (NASDAQ:BGCP), revealed that after the company was about to engage in a hostile takeover attempt, as the GFI Group’s (NYSE:GFIG) management did not respond to BGC’s attempts to privately negotiate a confidentiality agreement with the company, after previously offerering $5.25 in an all cash settlement.

Yesterday’s closing market price of the company’s shares was $5.13, after trading as low as $2.99 before the first bid for the company came from the CME Group Inc (NASDAQ:CME) in July. The GFI Group (NYSE:GFIG) was offered $4.55 per share, which was all supposed to be paid out in CME Group Inc (NASDAQ:CME) stock.

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Subsequently, BGC Partners made an all-cash $675 million unsolicited offer totaling about $5.25 a share in an all-cash deal.

The Chicago Mercantile Exchange (CME) has been after the firm’s OTC Energy, FX Futures and Options technology consisting of Trayport and FENICS. A private consortium led by GFI Group’s management would acquire from the CME the wholesale brokerage of GFI for $165 million in a cash deal, after the closure of the sale to the CME Group Inc (NASDAQ:CME) for $4.55 a share.

BGC Partners announced today that it has already commenced a fully-financed tender offer to acquire all of the outstanding common shares of the GFI Group Inc. (NYSE:GFIG) and revealed that it already owns 13.5% of GFI’s outstanding shares. The offer represents a premium of more than 15% to the $4.55 per share all-stock offer announced by the CME Group Inc. (NASDAQ:CME) and the GFI Group on July 30, 2014.

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It is also higher by more than 68% when compared to the price of GFI Group’s (NYSE:GFIG) shares trading on July 29, 2014, the last day prior to the announcement of the CME transaction.

Despite this, the company’s board of directors “has not changed its recommendation with respect to, and continues to support, the pending transaction with the CME Group Inc.”

The offer made by BGC Partners and withdrawal rights will expire at 12:00 midnight Eastern Time at the end of the day on November 19, 2014, pending a possible extension.

The BGC Group will file today the full terms and conditions of the offer with the U.S. Securities and Exchange Commission (SEC).

BGC Partners’ (NASDAQ:BGCP) CEO, Howard Lutnick, commented in the company announcement, “Despite our best efforts to engage with GFI regarding a negotiated transaction, we have been met with only unreasonable demands and delay tactics in connection with our attempts to execute even a confidentiality agreement covering information on the Trayport and FENICS businesses with GFI and its management. It is time to allow GFI shareholders to choose for themselves.”

“We remain confident that a combination of GFI and BGC will deliver significant benefits to GFI’s customers and brokers as part of a larger, better capitalized and more diversified company.  We expect the combination will also produce increased productivity per broker, meaningful synergies, substantial earnings accretion and stronger cash flow, enabling us to drive shareholder value and deliver superior service for our customers,” he concluded.

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