NEW YORK, April 15 High-speed trading firms
Knight Capital Group and Getco Holding Co expect to
achieve up to $110 million in annual cost savings within three
years of closing their $1.4 billion merger, according to a
regulatory filing released on Monday.
The companies said they expect $20 million to $30 million in
annual savings after the first year of operating as a single
company. The savings are expected to come in part from
reductions in infrastructure, personnel and professional fees,
the filing said.
The deal, which combines two of the largest U.S. automated
trading firms, is expected to close in the first half of 2013.
The companies also said they would issue two-thirds less
common shares of the new company to Knight stock holders and
Getco unit holders, while increasing the per-share value to
$11.25 from $3.75.
The companies said they adjusted the exchange ratio to
ensure the trading price of the merged company's common stock
closed above the New York Stock Exchange's minimum stock
price listing requirement of $4 per share. The adjustment would
not affect the amount paid either to Knight stockholders or
Jersey City, New Jersey-based Knight said in February it
planned to lay off 5 percent of its global workforce - it had
1,524 employees as of year-end - as part of restructuring
Knight was forced to take on additional investors and
re-examine its business following a software problem in August
that led to millions of unintentional orders flooding into the
market, leaving Knight with a loss of $461.1 million.
Following the glitch, Knight secured $400 million in rescue
financing - in exchange for a more than 70 percent stake in the
company - from a group of investors that included Chicago-based
Getco and was led by Jefferies Group Inc. Jefferies later helped
finance Getco's proposed acquisition of Knight.
Profits at closely held, Chicago-based Getco dove in 2012 on
soft equity volumes, low market volatility and increased