GFI Group, an intermediary broker and provider of trading technologies and services to both the OTC and listed markets, including Trayport and Fenics which handle energy and FX, acknowledged yesterday that it had received an unsolicited proposal from BGC Partners.
On September 9, BGC reportedly offered to acquire all the shares of the company’s common stock for $5.25 per share in cash, in total about $675 million, or 15.4% higher than the stock-only Chicago Mercantile Exchange Group (CME) deal for $4.55 per GFI share.
The company said its board of directors has determined, after consultation with legal counsel and independent financial advisors, that the BGC proposal could reasonably be expected to lead to a “Superior Proposal,” as defined in the existing merger agreement with CME Group.
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That determination allows the company to provide information and conduct discussions and negotiations with BGC subject to the execution of a confidentiality agreement, but does not allow GFI to terminate its agreement with CME or enter into any other agreement with BGC.
The company’s board of directors has not determined whether the proposal in fact constitutes a superior proposal under the existing merger agreement with CME, as the proposal is not at a sufficiently detailed or definitive stage for such a determination to be appropriate. They said: “There can be no assurance that the proposal will result in the consummation of a transaction that is superior to the pending transaction with CME.”
The current position of the company’s board of directors is that it “has not changed its recommendation with respect to, and continues to support, the pending transaction with CME.” It remains to be seen if the CME offer remains at the initial offer of $4.55 per share or if the BGC proposal forces CME to pay more than they bargained for.