BGC Announces Sale of its Platform for the Fully Electronic Trading of Benchmark, on-the-Run U.S. Treasuries to NASDAQ OMX

Mon Apr 1, 2013 4:03pm EDT

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BGC Conference Call to Discuss Transaction Scheduled for Today at 6 PM ET
NEW YORK,  April 1, 2013  /PRNewswire/ -- BGC Partners, Inc. (NASDAQ: BGCP)
("BGC Partners," "BGC," or "Company"), today announced that it has entered into
an agreement pursuant to which it will sell its benchmark, on-the-run, U.S.
Treasury fully electronic trading platform to NASDAQ OMX Group, Inc. (NASDAQ:
NDAQ) ("NASDAQ OMX"). Total consideration for this transaction is up to  $1.234
billion, consisting of  $750 million  in cash plus an earn-out of up to  $484
million  of NASDAQ OMX common stock[1] to be paid ratably over 15 years.

(Logo:  )

BGC is selling only its on-the-run, benchmark 2-, 3-, 5-, 7-, 10-, and 30-year
fully electronic trading platform for U.S. Treasury Notes and Bonds.  Over time,
BGC has built these six instruments into some of the deepest and most liquid
markets in the world.  This platform, together with the directly related market
data and co-location businesses, generated just under  $100 million  in revenues
in 2012.  BGC will retain all of its other voice, hybrid, and fully electronic
trading, market data, and software businesses, including voice, hybrid and
electronic brokerage of off-the-run U.S. Treasuries, as well as Treasury Bills,
Treasury Swaps, Treasury Repos, Treasury Spreads, and Treasury Rolls.  BGC will
also continue to offer voice brokerage for on-the run U.S. Treasuries.  

Howard W. Lutnick, Chairman and Chief Executive Officer of BGC Partners, said
"Since the formation of BGC in 2004, our business model has consisted of
investing in voice-only markets; introducing the technology that, along with our
brokers, creates voice, hybrid, and electronic marketplaces; and converting our
hybrid markets to fully electronic trading platforms.  Today's announcement
clearly demonstrates that this process ultimately leads to enormous value for
our stockholders.  The total consideration for this transaction - up to  $1.234
billion  - is approximately equal to BGC's current fully diluted market
capitalization.[2]  This transaction demonstrates our commitment to maximizing
value for our stockholders, and we expect to consider additional ways to further
unlock value.   

"The assets we are selling generated just under  $100 million  in revenues in
2012, and constituted less than 6 percent of our overall revenues for last year
- while analysts following us currently expect BGC to generate around  $1.85
billion  in revenues[3] for 2013.  Consequently, we think that the market was
clearly under-valuing the assets of the Company.  This transaction should better
enable investors and analysts to place an accurate valuation on BGC's assets
post-closing:  our remaining voice, hybrid, and fully electronic brokerage
businesses and our market data and software products across our Financial
Services segment; our significant and growing Real Estate Services segment; and
the scale of our strengthened balance sheet.  We will also have the financial
wherewithal to maintain our dividend for the foreseeable future and to
repurchase common shares or units."

"Despite the events of  September 11, 2001, the global financial crises of 2008,
and other challenges we have faced in the 15 years since we launched our fully
electronic platform for trading on-the-run, benchmark U.S. Treasuries, BGC has
succeeded in creating and growing this platform into a world-class and leading
brand in the financial markets.  We are extremely proud of all that we have
accomplished, and can think of no better place for this platform to further grow
and flourish than NASDAQ OMX," Mr. Lutnick added.

Proposed Transaction Details
Under the terms of the purchase agreement, BGC will sell to NASDAQ OMX certain
assets, including the eSpeed brand name and various contracts comprising the
fully electronic portion of BGC's benchmark, on-the-run, U.S. Treasury
brokerage, market data and co-location service businesses.  The agreement also
includes the employment by NASDAQ OMX of certain members of BGC staff and BGC's 
Rochelle Park  data center.  These assets will be sold to NASDAQ OMX for a
purchase price of  $750 million  in cash, plus an earn-out of up to  $484
million  in NASDAQ OMX common stock to be paid ratably over 15 years following
the closing.  Should certain acceleration events occur, including NASDAQ OMX
undergoing a change of control, whatever remains of the earn-out will be paid
immediately at that time.

BGC has agreed not to compete with NASDAQ OMX in fully electronic, on-the-run,
benchmark U.S. Treasury Notes and Bonds for 3 years following the close of this
transaction.  BGC retains the right to use the trading technology it has
developed for this trading platform.  BGC will continue to offer voice, hybrid
and fully electronic trading, market data, and software solutions across the
rest of its suite of financial products in Rates, Credit, Foreign Exchange, and
Equities and Other Asset Classes.  After the close of the transaction, the
Company will also retain access to the trading, market data, and co-location
products related to the assets BGC is selling.  The Company will also retain its
ownership stakes in ELX Futures and Epsilon Networks.[4]

The one-time gain related to the  $750 million  payment is expected to be
accretive to BGC's GAAP earnings per share upon closing, but will not be
included in the Company's results for distributable earnings.

The transaction is subject to certain closing conditions, including receipt of
required regulatory approvals.  The parties currently expect the deal to close
sometime in mid-2013, subject to receipt of such approvals.

BGC Partners' legal advisor in connection with the transaction was Wachtell,
Lipton, Rosen & Katz. Cantor Fitzgerald & Co. served as the Company's financial

Conference Calls to Discuss Transaction
BGC will hold an investor conference call today,  April 1, at  6:00 P.M. Eastern
Time.  A webcast of the call will be accessible at the "Investor Relations"
section of  or directly at  Additionally, call participants may dial in with
the following information:

 LIVE CALL:                                                               
 Date - Start Time:      4/1/2013 6:00 PM ET                              
 U.S. Dial In:           866-202-0886                                     
 International Dial In:  +1 617-213-8841                                  
 Participant Passcode:   1997-6698                                        
 Available From - To:    04/01/2013 08:00 PM ET - 04/08/2013 11:59 PM ET  
 U.S. Dial In:           888-286-8010                                     
 International Dial In:  +1 617-801-6888                                  
 Passcode:               9295-3219                                        

(Note: If clicking on the above links does not open up a new web page, you may
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NASDAQ OMX also plans to hold an investor conference call regarding this
transaction, the details of which can be found in NASDAQ OMX's separate press
release discussing this transaction.   Their press release was issued
simultaneously with this document, and can be found at

BGC Updates First Quarter 2013 Guidance
In addition, BGC today also updated its financial outlook for the quarter ending
 March 31, 2013.   

The Company expects that its financial results will be around the low end of the
range of its previously stated guidance for both revenues and earnings when it
announces its financial results for the first quarter on  May 2, 2013.  The
Company's first quarter outlook was first published in its financial results
press release dated  February 14, 2013, and was as follows:

First Quarter 2013 Outlook Compared with First Quarter 2012 Results

*   The Company expected to generate distributable earnings revenues of between 
$440 million and $470 million, an increase of approximately 9 percent to 16
percent compared with  $403.9 million.   
*   BGC Partners expected pre-tax distributable earnings to be between
approximately  $45 million and $55 million  versus  $58.2 million.   
*   BGC Partners anticipated its effective tax rate for distributable earnings
to be approximately 14.5 percent compared with 14.2 percent.   

Commercial real estate services revenues and profitability tend to be lowest
industry-wide in the first quarter of a typical year and highest in the fourth

BGC Partners' first quarter 2013 financial results announcement is scheduled to
be issued prior to the market open on  Thursday, May 2, 2013.  Details for how
to access the call can be found at

Distributable Earnings Defined
BGC Partners uses non-GAAP financial measures including "Revenues for
distributable earnings," "pre-tax distributable earnings" and "post-tax
distributable earnings," which are supplemental measures of operating
performance that are used by management to evaluate the financial performance of
the Company and its subsidiaries. BGC Partners believes that distributable
earnings best reflect the operating earnings generated by the Company on a
consolidated basis and are the earnings which management considers available for
distribution to BGC Partners, Inc. and its common stockholders, as well as to
holders of BGC Holdings partnership units during any period.  

As compared with "income (loss) from operations before income taxes," "net
income (loss) for fully diluted shares," and "fully diluted earnings (loss) per
share," all prepared in accordance with GAAP, distributable earnings
calculations primarily exclude certain non-cash compensation and other expenses
which generally do not involve the receipt or outlay of cash by the Company,
which do not dilute existing stockholders, and which do not have economic
consequences, as described below.  In addition, distributable earnings
calculations exclude certain gains and charges that management believes do not
best reflect the ordinary operating results of BGC.

Revenues for distributable earnings are defined as GAAP revenues excluding the
impact of BGC Partners, Inc.'s non-cash earnings or losses related to its equity
investments, such as in Aqua Securities, L.P. and ELX Futures, L.P., and its
holding company general partner, ELX Futures Holdings LLC.  Revenues for
distributable earnings include the collection of receivables which would have
been recognized for GAAP other than for the effect of acquisition accounting. 
Revenues for distributable earnings also exclude certain one-time or unusual
gains that are recognized under GAAP, because the Company does not believe such
gains are reflective of its ongoing, ordinary operations.   

Pre-tax distributable earnings are defined as GAAP income (loss) from operations
before income taxes excluding items that are primarily non-cash, non-dilutive,
and non-economic, such as:

* Non-cash stock-based equity compensation charges for REUs granted or issued
prior to the merger of BGC Partners, Inc. with and into eSpeed, as well as
post-merger non-cash, non-dilutive equity-based compensation related to
partnership unit exchange or conversion.
* Allocations of net income to founding/working partner and other limited
partnership units, including REUs, RPUs, PSUs, LPUs, and PSIs.
* Non-cash asset impairment charges, if any.

Distributable earnings calculations also exclude charges related to purchases,
cancellations or redemptions of partnership interests and certain unusual,
one-time or non-recurring items, if any.

"Compensation and employee benefits" expense for distributable earnings will
also include broker commission payouts relating to the aforementioned collection
of receivables.

Beginning with the first quarter of 2011, BGC's definition of distributable
earnings was revised to exclude certain gains and charges with respect to
acquisitions, dispositions, and resolutions of litigation. This change in the
definition of distributable earnings is not reflected in, nor does it affect the
Company's presentation of prior periods.  Management believes that excluding
these gains and charges best reflects the operating performance of BGC.

Since distributable earnings are calculated on a pre-tax basis, management
intends to also report "post-tax distributable earnings" and "post-tax
distributable earnings per fully diluted share":

* "Post-tax distributable earnings" are defined as pre-tax distributable
earnings adjusted to assume that all pre-tax distributable earnings were taxed
at the same effective rate.
* "Post-tax distributable earnings per fully diluted share" are defined as
post-tax distributable earnings divided by the weighted-average number of fully
diluted shares for the period.

BGC's distributable earnings per share calculations assume either that:

* The fully diluted share count includes the shares related to the dilutive
instruments, such as the Convertible Senior Notes, but excludes the associated
interest expense, net of tax, when the impact would be dilutive; or
* The fully diluted share count excludes the shares related to these
instruments, but includes the associated interest expense, net of tax.

Each quarter, the dividend to common stockholders is expected to be determined
by the Company's Board of Directors with reference to post-tax distributable
earnings per fully diluted share.  In addition to the Company's quarterly
dividend to common stockholders, BGC Partners expects to pay a pro-rata
distribution of net income to BGC Holdings founding/working partner and other
limited partnership units, including REUs, RPUs, PSUs and PSIs, and to Cantor
for its noncontrolling interest. The amount of all of these payments is expected
to be determined using the above definition of pre-tax distributable earnings
per share.

Certain employees who are holders of RSUs are granted pro-rata payments
equivalent to the amount of dividends paid to common stockholders. Under GAAP, a
portion of the dividend equivalents on RSUs is required to be taken as a
compensation charge in the period paid. However, to the extent that they
represent cash payments made from the prior period's distributable earnings,
they do not dilute existing stockholders and are therefore excluded from the
calculation of distributable earnings.

Distributable earnings is not meant to be an exact measure of cash generated by
operations and available for distribution, nor should it be considered in
isolation or as an alternative to cash flow from operations or GAAP net income
(loss). The Company views distributable earnings as a metric that is not
necessarily indicative of liquidity or the cash available to fund its

Pre- and post-tax distributable earnings are not intended to replace the
Company's presentation of GAAP financial results. However, management believes
that they help provide investors with a clearer understanding of BGC Partners'
financial performance and offer useful information to both management and
investors regarding certain financial and business trends related to the
Company's financial condition and results of operations. Management believes
that distributable earnings and the GAAP measures of financial performance
should be considered together.

Management does not anticipate providing an outlook for GAAP "revenues," "income
(loss) from operations before income taxes," "net income (loss) for fully
diluted shares," and "fully diluted earnings (loss) per share," because the
items previously identified as excluded from pre-tax distributable earnings and
post-tax distributable earnings are difficult to forecast. Management will
instead provide its outlook only as it relates to revenues for distributable
earnings, pre-tax distributable earnings and post-tax distributable earnings.  

For more information on this topic, please see the table in BGC's most recent
financial results press release entitled "Reconciliation of GAAP Income to
Distributable Earnings" which provides a summary reconciliation between pre- and
post-tax distributable earnings and the corresponding GAAP measures for the
Company in the periods discussed in BGC's most recent financial results press

About BGC Partners, Inc.
BGC Partners is a leading global brokerage company primarily servicing the
wholesale financial and real estate markets.  Products include fixed income
securities, interest rate swaps, foreign exchange, equities, equity derivatives,
credit derivatives, commercial real estate, commodities, futures, and structured
products. BGC also provides a wide range of services, including trade execution,
broker-dealer services, clearing, processing, information, and other back-office
services to a broad range of financial and non-financial institutions.  Through
its eSpeed, BGC Trader, and BGC Market Data brands, BGC offers financial
technology solutions, market data, and analytics related to select financial
instruments and markets.  Through the NGKF brand, the Company offers a wide
range of commercial real estate services including leasing and corporate
advisory, investment sales and financial services, consulting, project and
development management, and property and facilities management. BGC's customers
include many of the world's largest banks, broker-dealers, investment banks,
trading firms, hedge funds, governments, corporations, property owners, real
estate developers, and investment firms. For more information, please visit   

eSpeed, BGC, BGC Trader, Grubb & Ellis, Grubb and Newmark are trademarks and
service marks of BGC Partners, Inc. and its affiliates.  Knight Frank is a
service mark of Knight Frank Limited Corp., used with permission.

Discussion of Forward-Looking Statements by BGC Partners  
Statements in this press release regarding BGC Partners' business that are not
historical facts are "forward-looking statements" that involve risks and
uncertainties. Except as required by law, BGC undertakes no obligation to
release any revisions to any forward-looking statements.  For a discussion of
additional risks and uncertainties, which could cause actual results to differ
from those contained in the forward-looking statements, see BGC's Securities and
Exchange Commission (SEC) filings, including, but not limited to, the risk
factors set forth in our public filings, including our most recent Form 10-K and
any updates to such risk factors contained in subsequent Form 10-Q or Form 8-K
filings.  These risks include those related to the possibility that the
transaction does not close in a timely manner or at all; the possibility that
the conditions to completion of the transaction, including receipt of required
regulatory approvals, are not satisfied; the possibility that any of the
anticipated benefits of the proposed transaction will not be realized; the
effect of the announcement of the transaction on BGC's business relationships,
operating results and business generally; general competitive, economic,
political and market conditions and fluctuations; and actions taken or
conditions imposed by regulatory authorities.

[1] The specific number of shares associated with this amount is expected to be
calculated upon the close of this transaction.

[2] As of  December 31, 2012, BGC's fully diluted share count for both U.S.
Generally Accepted Accounting Principles ("GAAP") and distributable earnings was
302.0 million, excluding the share equivalents associated with the Company's
Convertible Senior Notes.

[3] Based on Thomson-Reuters consensus data as  March 29, 2013.

[4] A joint venture with Thesys Technologies to invest in the creation of
high-speed microwave data networks for the financial community.  See BGC's press
release dated  July 31, 2012, for more details.

SOURCE  BGC Partners, Inc.

Hannah Sloane, +1 212-294-7938; or Sarah Laufer, +1 212-915-1008; or BGC
Investor Contacts, Jason McGruder, +1 212-829-4988; or Ben Goldman, +1

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