Cowen Acquires Convergex Group for $100m, Ending Millennium Dark Pool

The $100m deal will see Convergex rebranded into Cowen Execution Services, while Millennium will be shut down.

Cowen Inc. (NASDAQ:COWN) has closed its acquisition of Convergex Group, LLC, an agency-focused global brokerage and trading related services provider for $100.7 million, strengthening the group’s execution capabilities, per a group statement.

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Cowen Inc. provides alternative investment management, investment banking, research, and sales, and trading services through its broker-dealer business and alternative investment management unit. The deal totaled $100.7 million, which includes $53.1 million in cash and $47.6 million in Cowen common stock.

In acquiring Convergex, Cowen will be renaming the group to Cowen Execution Services LLC, while Convergex Limited, its London-based brokerage, is being rebranded as Cowen Execution Services Limited. The deal is significant as it helps solidify Cowen’s role as a key player in the US trading volumes space, ultimately expanding its market focus to upwards of 108 countries.

The deal also represents a continuation of its growth strategy in 2017 and beyond, as the firm eyes gains in economic income per share and a return on tangible common equity by as early as 2018.

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Discontinuation of Millennium

Following the acquisition of Convergex and its subsequent rebranding efforts, Cowen will also be scrapping Millennium, the group’s SEC-registered alternative trading system (ATS) that provides subscribers with anonymous access to a pool of liquidity. The dark pool will be shut down and will be halting its trading as early as June 23, 2017.

Millennium was a key sticking point from Cowen’s President Jeffrey Solomon, who had been at odds with the level of fragmentation garnered from dark pool trading: “By discontinuing Millennium ATS’s midpoint matching engine, Cowen has the ability to proactively reduce fragmentation – something we and many of our clients feel will improve U.S. equity market structure,” he explained.

Millennium currently represents the sixteenth-largest US equities dark pool out of thirty-one, citing the latest statistics from the Financial Industry Regulatory Authority. Dark pools operate with greater anonymity than other regulated exchanges, given that they are not required to provide information such as trade sizes or prices to the public prior to trades being executed.

Jeffrey Solomon

According to Peter Cohen, Chairman and Chief Executive Officer of Cowen, in a statement on the acquisition: “The acquisition of Convergex enhances our position as a leader in high quality research and superior global execution capabilities. This transaction is another step forward in Cowen’s overall growth strategy.”

“Integrating the best of Convergex with Cowen shows Cowen’s commitment to providing its combined client base with innovative and differentiated capabilities. As an organization focused on helping our clients outperform, we look forward to showcasing our comprehensive service offerings in the months ahead. Our team has worked extensively to ensure clients experience the same high-quality service that they have come to expect from our organizations,” he added.

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