Knight Capital Group to Acquire Libertas Holdings, LLC, a Leading Boutique Institutional Fixed Income Brokerage Firm
May 06 2008 - 6:30AM
PR Newswire (US)
Deal valued at $75 million at close will create powerful equities
and fixed income distribution network; Deal includes a potential
earn-out of up to $75 million based on performance in the
three-year period following the close JERSEY CITY, N.J., May 6
/PRNewswire-FirstCall/ -- Knight Capital Group, Inc. (NASDAQ:NITE)
today announced that it has agreed to acquire Libertas Holdings,
LLC, a leading boutique institutional fixed income brokerage firm,
for approximately $50 million in cash and $25 million of
unregistered Knight stock, payable upon close. The terms of the
agreement include two components valued at up to $150 million. At
the close, the approximately $50 million in cash is subject to an
adjustment based on actual working capital at Libertas, and $25
million of unregistered Knight stock is subject to certain
contractual transfer restrictions. The agreement also includes a
potential earn-out of up to $75 million of unregistered Knight
stock based on future performance of Libertas in the three-year
period following the close. "Libertas is a fast-growing, fixed
income boutique that provides buy-side clients with well-respected
proprietary research and much-needed liquidity in the trading
process," said Thomas M. Joyce, Chairman and CEO, Knight Capital
Group. "Since its founding, Libertas has exhibited steady revenue
growth and trading volumes that belie the firm's modest size.
Following the deal close, Knight will have a powerful equity and
fixed income distribution network." Founded by Chief Executive
Officer Gary Katcher in 2002, Libertas is a privately-held,
riskless principal, fixed income broker-dealer specializing in
high-yield, distressed, asset-backed and mortgage-backed securities
(ABS/MBS). Libertas also provides clients with proprietary research
on companies and target sectors. Based in Greenwich, C.T., the firm
has 59 employees and satellite offices in New York, London and Hong
Kong. Upon close of the agreement, Mr. Katcher will report to Mr.
Joyce and become a member of the Knight management team. "Joining
Knight presents a perfect fit and the next logical step for
Libertas. Our shared strong client focus, combined with the deep
resources of Knight Capital Group, will allow us to grow all
aspects of our fixed income business much faster than if we had
opted to remain independent," Mr. Katcher said. Knight provides
market access and trade execution services across multiple asset
classes to more than 1,700 buy-side firms. According to industry
reports, revenues from institutional fixed income trading in
high-yield, distressed and ABS/MBS amount to approximately $2
billion annually. The closing of the transaction is subject to
customary closing conditions, including the receipt of regulatory
approvals, and is expected to be completed in the fall of 2008. The
acquisition is expected to be cash flow positive immediately
following the closing of the transaction and accretive to earnings
per share in 2009. Upon the close of the acquisition, Libertas will
operate as a wholly-owned operating subsidiary of Knight Capital
Group. Libertas is a member of FINRA and is authorized and
regulated by the Financial Services Authority (FSA) and the
Securities Futures Commission (SFC). The advisors to Knight on the
transaction are Sandler O'Neill + Partners and Skadden, Arps,
Slate, Meagher & Flom LLP. The advisor to Libertas is Proskauer
Rose LLP. Conference Call and Webcast Knight will conduct a
conference call for analysts, investors and media at 9:00 a.m.
Eastern Daylight Time today, May 6, 2008. Chairman and CEO Thomas
M. Joyce will make a statement and answer questions related to the
acquisition of Libertas. To access the call, domestic participants
may dial 877-857-6151. International participants may dial
719-325-4765. The passcode is 4102393. Please dial in at least
fifteen minutes before the call is scheduled to begin and be
prepared to provide your name and company affiliation. A live
webcast of the conference call will be available at
http://www.knight.com/investorcenter/webcasts.asp. Please note that
participants who would like to ask questions must dial in to the
conference call. Questions cannot be submitted through the webcast.
About Knight Knight Capital Group, Inc. is a leading financial
services firm that provides electronic and voice access to the
capital markets across multiple asset classes for buy-side,
sell-side and corporate clients. In Global Markets, we provide
market access and trade execution services in nearly every U.S.
equity security and a large number of international securities,
futures, options, foreign exchange and fixed income. In Asset
Management, Knight owns a 51 percent stake in Deephaven Holdings
with Deephaven Partners controlling the remaining 49 percent as of
February 1, 2008. Deephaven (http://www.deephavenfunds.com/) is a
global multi-strategy alternative investment manager serving
institutions and private clients. More information about Knight can
be found at http://www.knight.com/. Certain statements contained
herein may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are not historical facts and are
based on current expectations, estimates and projections about the
Company's industry, management's beliefs and certain assumptions
made by management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, readers are
cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict
including, without limitation, risks associated with the costs,
integration, performance and operation of businesses recently
acquired, or that may be acquired in the future, by the Company.
Since such statements involve risks and uncertainties, the actual
results and performance of the Company may turn out to be
materially different from the results expressed or implied by such
forward-looking statements. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or
uncertainties or to announce publicly the result of any revisions
to the forward-looking statements made herein. Readers should
carefully review the risks and uncertainties disclosed in the
Company's reports with the U.S. Securities and Exchange Commission
(SEC), including, without limitation, those detailed under the
headings "Certain Factors Affecting Results of Operations" and
"Risk Factors" in the Company's Annual Report on Form 10-K for the
year-ended December 31, 2007, and in other reports or documents the
Company files with, or furnishes to, from time to time the SEC.
This information should also be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto
contained in the Company's Annual Report on Form 10-K for the
year-ended December 31, 2007, and in other reports or documents the
Company files with, or furnishes to, the SEC from time to time.
DATASOURCE: Knight Capital Group, Inc. CONTACT: Margaret Wyrwas,
Senior Managing Director, Communications, Marketing & Investor
Relations, +1-201-557-6954, ; or Kara Fitzsimmons, Director, Media
Relations, +1-201-356-1523, ; or Jonathan Mairs, Vice President,
Corporate Communications, +1-201-356-1529, , all of Knight Capital
Group, Inc. Web site: http://www.knight.com/
http://www.knight.com/investorcenter/webcasts.asp
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