After trading higher on Monday due to rumors that the company was in play, Knight Capital reported today that it received a formal bid from equity market maker company Getco. The stock and cash offer values shares of Knight Capital at $3.50/share. On the news, shares of Knight are higher by 16% to $3.47 and are over 40% higher from last week’s closing levels before weekend talk of a buyout occurred.
With reports of rival market maker Virtu Financial and possibly also Citadel Capital (who inquired but didn’t participate in Knight’s August refinancing) being interested in Knight, we could see Getco’s bid being trumped by another participant. Although equity volumes have fallen this year and specifically HFT trades have decreased after the Knight glitch in August, Knight Capital’s technological network is considered a prize asset and worth taking a shot on with the depressed price of the company.
In regards to Knight’s FX trading unit Hotspot, so far no details have emerged of how a deal will impact that business.