Knight Capital Group and GETCO Holding Company Merge
Following rumors after the close of US trading yesterday, Knight Capital Group has announced today that it has agreed to merge with GETCO Holding Company in a deal that values Knight at $1.4 billion. According to the deal, Knight shareholders will receive one share of the combined group or $3.75 per share. The combined unit will be publically traded.
For Knight shareholders, the merger allows them to see continued appreciation if the value of the combined businesses increases. The component of a further asset appreciation was viewed as critical to existing shareholders and the reason GETCO’s bid had trumped one from rival Virtu LLC. The $3.75 cash value represents a 51% increase from November 23rd and is 15% above Knight’s tangible book value that was reported on September 30th. In pre-market trading, shares of Knight Capital (KCG) are trading at $3.54.
The combined GETCO and Knight will become a powerhouse for US equity market making. The focus though on Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Read this Term has put Knight’s other businesses in question and increased the likelihood that its Hotspot FX and BondPoint trading units will be sold. For Hotspot FX specifically, since the start of bidding for Knight began in November, the unit has been rumored to be on the block. Rumored buyers include Nasdaq OMX which could be seeing the potential in Hotspot FX as a means to quickly expand its assets offering. In a note to clients, Niamh Alexander, Analyst at Keefe, Bruyette, & Woods stated wrote "Given some of the $720 million of cash payout will be funded with borrowed cash, we would anticipate some of the electronic businesses might be sold to help pay down debt used to finance the deal, such as Hotspot or Bondpoint and Astor Asset Management, potentially KCG's stake in Direct Edge, but we don't know management's plans yet."
Following rumors after the close of US trading yesterday, Knight Capital Group has announced today that it has agreed to merge with GETCO Holding Company in a deal that values Knight at $1.4 billion. According to the deal, Knight shareholders will receive one share of the combined group or $3.75 per share. The combined unit will be publically traded.
For Knight shareholders, the merger allows them to see continued appreciation if the value of the combined businesses increases. The component of a further asset appreciation was viewed as critical to existing shareholders and the reason GETCO’s bid had trumped one from rival Virtu LLC. The $3.75 cash value represents a 51% increase from November 23rd and is 15% above Knight’s tangible book value that was reported on September 30th. In pre-market trading, shares of Knight Capital (KCG) are trading at $3.54.
The combined GETCO and Knight will become a powerhouse for US equity market making. The focus though on Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Read this Term has put Knight’s other businesses in question and increased the likelihood that its Hotspot FX and BondPoint trading units will be sold. For Hotspot FX specifically, since the start of bidding for Knight began in November, the unit has been rumored to be on the block. Rumored buyers include Nasdaq OMX which could be seeing the potential in Hotspot FX as a means to quickly expand its assets offering. In a note to clients, Niamh Alexander, Analyst at Keefe, Bruyette, & Woods stated wrote "Given some of the $720 million of cash payout will be funded with borrowed cash, we would anticipate some of the electronic businesses might be sold to help pay down debt used to finance the deal, such as Hotspot or Bondpoint and Astor Asset Management, potentially KCG's stake in Direct Edge, but we don't know management's plans yet."