* Knight held board meeting on Monday to examine bids
* Suitors Getco and Virtu have made presentations to Knight
NEW YORK Dec 17 Electronic trading firm Knight
Capital Group is considering two competing acquisition
offers following a board meeting on Monday that included
presentations from suitors Getco Holding LLC and Virtu Financial
LLC, sources familiar with the talks said.
Getco recently increased the amount of upfront cash to its
cash and stock offer, valuing it near $1.8 billion, while
Virtu's all-cash bid of $3.20 a share amounts to around $1.6
billion, according to the Wall Street Journal.
A spokeswoman for Knight and a spokesman for Virtu had no
comment. A spokeswoman for Getco was not immediately available.
Virtu has lined up financing for its bid from private equity
firm Silver Lake, a Virtu investor, along with Barclays, RBC
Capital Markets, and others, sources with knowledge of the talks
told Reuters. Private equity firm Cerberus was also considering
backing the bid, according to reports.
Knight was made vulnerable to a takeover this summer when a
trading glitch left it nearly bankrupt before a group of
investors stepped in with $400 million in emergency capital.
The U.S. Securities and Exchange Commission is conducting an
investigation into the glitch.
Knight's U.S. market-making business, which uses computer
models to match buy and sell orders in stocks and options and
executes around 10 percent of U.S. equity trading volume, had
remained profitable, despite a market-wide trading slump.
Aside from being a major market maker, matching equity
orders from buyers and sellers and providing liquidity, Knight
runs bond and foreign exchange trading platforms and owns a
reverse mortgage lender. It also holds a stake of about 20
percent in Direct Edge, the No. 4 U.S. cash equities exchange.
Both Getco and Virtu are mainly interested in Knight's
market-making business, and would sell off other assets, people
familiar with the firms' plans have said.
Getco, in its original offer filed with regulators, said
Knight would remain a public company under its plan. Virtu,
however, would take the company private, a person close to Virtu
On Aug. 1, Knight went live with new software that had been
improperly installed. The software conflicted with old code that
was to have been deleted, unleashing a flood of orders to the
New York Stock Exchange, and leaving Knight with a massive
position it had to unload at a loss totaling $461.1 million.
Days later, with Knight's future in question, several
companies - Blackstone Group LP, Getco and financial
services companies TD Ameritrade Holding Corp, Stifel
Nicolas, Jefferies Group Inc and Stephens Inc -
stepped in with a $400 million investment to keep it afloat.
As part of the deal, Getco investor General Atlantic, as
well as Blackstone and TD Ameritrade, were given seats on