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Virtu to buy ITG
Posted on Thursday, 08 November 2018 14:45
Leading financial services firm Virtu Financial has continued its hunt to add big institutional investors to its portfolio, with a purchase of independent brokerage Investment Technology Group (ITG) for USD 1.00 billion.
The transaction, which is valued at USD 30.30 in cash per share, is expected to complete during the first half of 2019, subject to the usual regulatory approvals.
Virtu is offering a 9.1 per cent premium to the target’s close of USD 27.75 on 6th November, the last trading day prior to the announcement.
ITG’s shares increased by 8.2 per cent to USD 30.05 yesterday, following the news, giving the business a market capitalisation of USD 991.32 billion.
Virtu will fund the purchase through new gross borrowings of USD 1.50 billion, and plans to repay the aggregate outstanding amount under its existing term loan of USD 400.00 million.
ITG is a global financial technology company, specialising in assisting brokers and asset managers to improve for investors worldwide.
It currently has just under 1,000 employees across nine countries in Asia, Europe and North America, and posted revenue of USD 128.50 million for the second financial quarter ending 30th June 2018, up from USD 121.60 million for the same period twelve months earlier.
News of the deal follows the buyer’s acquisition of high-frequency trader KCG Holdings in July 2017 for USD 1.40 billion.
The purchase is also expected to expand the firm’s operating scale, and grow its revenue, which will increase from 10.0 per cent to 37.0 per cent through its technology and execution services.
In Virtu’s third quarter, ending 30th September 2018, it posted revenue of USD 295.10 million, up from USD 271.30 million in the corresponding period of 2017.
He added that the transaction would increase the efficiency of the buyer, from order routing to middle and back-office processes.
As a result of the deal, Virtu will be able to provide a comprehensive suite of agency services for clients, including transparent trading, analytics and liquidity solutions, among others.
Through the transaction, the buyer is also expected to post USD 123.00 million in net pre-tax savings and an additional USD 125.00 million in capital synergies.
According to Zephyr, the M&A database published by Bureau van Dijk, there have been 277 deals targeting securities brokerages announced worldwide since the beginning of 2018.
In the largest of these, CME London agreed to buy NEX Group for GBP 3.88 billion.
© Zephus Ltd