Getco LLC and Knight Capital Group Inc. (KCG) on Monday altered
their merger to comply with New York Stock Exchange listings
standards, according to a document filed with regulators.
They revised the ratio by which shares of Knight and units of
privately held Getco will be exchanged for stock in the combined
company.
This will elevate the merged Getco-Knight's share price above
the minimum $4.00 per-share required for new companies listed on
the Big Board, according to the document.
Getco, a specialist in high-frequency market making, agreed in
December to buy Knight, among the largest traders with online
brokerages in the U.S., for about $1.4 billion.
The value of the deal was unchanged under the amended merger
agreement filed with the Securities and Exchange Commission on
Monday.
Under the revised exchange ratio the planned entity's shares are
expected to carry a book value of $12.47 each. Terms of the
original merger agreement outlined a per-share book value between
$3.91 and $3.99 for the combined company.
Shares in Knight settled on Friday at $3.74. Getco and Knight
outlined expected cost savings from the deal at between $90 million
and $110 million annually though company officials wrote in the
filing it could take three years to achieve. Within the first year
of the deal closing the firms expect to save $20 million to $30
million, according to the filing. Getco intends to slash costs by
streamlining the technology both use to trade shares and
derivatives while cutting duplicated positions and operations such
as trade processing.
The deal was struck about five months after Knight suffered a
$461 million loss as the result of a trading error.
They expect to close the merger by July.
Write to Jacob Bunge at jacob.bunge@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires