This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Knight Capital Group: Buyout Fight Winner

NEW YORK ( TheStreet) -- Knight Capital Group (KCG - Get Report) was the Wall Street winner on Wednesday, with shares rising 15% to close at $3.41.

Knight Capital Group, which is headquartered in New Jersey, received a takeout bid of $3.50 a share in cash and stock from competitor Getco Securities, which was 18% above Knight's closing price of $2.97 on Tuesday.

Knight Capital Group was rescued by a group of investors including Getco, Stifel Financial (SF), TD Ameritrade (AMTD) and Blackstone (BX), which collectively provided $400 million in capital after Knight in August announced a $440 million loss after a trading glitch caused the company to make what CEO Thomas Joyce called "a ton of orders, all erroneous," which the company had to unwind.

The Wall Street Journal reported Virtu Financial LLC has also made a bid for Knight Capital Group, so investors might be treated to a bidding war for the firm.

Following KBW analyst Niamh Alexander upgraded Knight Capital to a "Market Perform" rating from "Underperform," while raising her price target for the shares to $2.60 from $2.25, saying that "If Virtu and Getco are considering buying the market-maker unit, we think that this would fit strategically with what these privately owned trading firms are doing."

Alexander said that other potential bidders for Knight Capital Group's market making business include Citigroup (C - Get Report) and UBS (UBS). The analyst's "sum of the parts analysis" of Knight indicates "a potential price ranging from $2.60 to $3.74," and that the "estimated valuation range or sale price range for the market making and institutional sales units could range from $1.71 to $2.49," while the "the electronic execution services units could fetch between $0.89 and $1.25 per share."

The analyst added that "our gut would be to focus more on the low end of these ranges, given not all of the corporate expenses may be eliminated."

The broad indexes strengthened late in the session to end with 1% gains on Wednesday, after President Obama spoke about the Fiscal Cliff at a White House event, saying he believed "that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas."

The KBW Bank Index (I:BKX) rose slightly to close at 48.50, with all but five index components seeing gains.

RELATED STORIES:





-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $52.90 0.00%
KCG $13.09 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs