Knight Capital Group (NYSE: KCG), which had to be rescued after it went belly-up in August following a $440 million loss later blamed on a "computer glitch," is expected to entertain takeover bids from interested parties this week.
Yesterday, high-frequency trading (HFT) giant Getco Securities, which already owns a 23.8% stake in Knight Capital, offered a combination of cash and shares valuing Knight at $3.50 per share, a 17.8% premium to Tuesday's close. Knight's share price rose 15% in trading yesterday in reaction to the bid, which was acknowledged by Knight management.
"I am convinced that this merger would unlock tremendous value for the shareholders of both firms while establishing a global leader in market-making and agency execution," Getco CEO Daniel Coleman said in the letter to Knight's board.
Another high-frequency trading firm, Virtu Financial Capital Markets LLC, reportedly plans to make an all-cash offer at $3.00 per share, according to FOX Business Network.
Wednesday's share-price rally was Knight Capital's biggest in nine years, as it could be about to be the focus on a bidding war between HFT firms.