Virtu Financial, Inc. (NASDAQ: VIRT) will purchase KCG Holdings, Inc. (NYSE: KCG) for $1.4 billion. KCG Holdings will help the company re-vitalize its businesses that have fallen due to market volatility.
According to Reuters, Virtu's offer of $20 per share represents a 12.7 percent premium to KCG's Wednesday close. Shares of New York-based Virtu were up about 5 percent in premarket trading on Thursday, while that of KCG were up 10.2 percent.
Virtu said it expects to migrate trading of the combined company onto a single platform. The market maker said it expects the deal to add over 25 percent to its earnings per share.
The transaction is expected to close in the third quarter after approval from KCG shareholders and regulators. Virtu plans to fund the deal with new gross borrowings of $1.65 billion and the sale of $750 million of common stock, priced at $15.60 per share.
Private equity firm North Island will invest $625 million in Virtu stock in partnership with Singapore sovereign wealth fund GIC and Canadian pension investment manager Public Sector Pension Investment Board.
Temasek, an existing Virtu shareholder, will invest an additional $125 million. JPMorgan Securities LLC will provide up to $1.65 billion of debt financing for the deal.