Brokerage BGC Partners Inc. (BGCP) formally launched a $675 million hostile offer for rival GFI Group Inc. GFIG after the two sides were unable to reach a consensual deal.
New York-based BGC, which already owns 13.5% of the target's shares, is offering $5.25 per share in cash for GFI. That is a 15% premium to a competing $4.55 offer CME Group Inc. (CME - Get Report) has made to acquire GFI.
The bid follows weeks of unsuccessful talks between the two companies. CME in July agreed to acquire GFI for $580 million before BGC entered the picture in September, but the companies have struggled to agree on a confidentiality agreement that would protect information about GFI's energy trading platform and other operations.
GFI's board, which backed the CME deal, has not determined whether the BGC offer is a superior proposal.
"Despite our best efforts to engage with GFI regarding a negotiated transaction, we have been met with only unreasonable demands and delay tactics," BGC chairman and CEO Howard Lutnick said in a statement. "It is time to allow GFI shareholders to choose for themselves."
BGC president Shaun D. Lynn in a letter to the board accompanying the tender said that he believes a side deal that he says would allow GFI management to purchase the brokerage business from CME "at a discount reflects deep conflicts of interest that would deprive GFI shareholders of the value of their investment."
BGC has secured committed financing from Morgan Stanley Senior Funding Inc., but said the offer has no financing condition. The company has also secured early termination of the waiting period required by regulators, saying the offer is conditioned on investors tendering enough shares for BGC to have a majority on a fully-diluted basis.
Cantor Fitzgerald & Co. is acting as financial adviser to BGC and dealer manager for its tender offer, with Wachtell, Lipton, Rosen & Katz providing legal advice and Innisfree M&A Inc. named as information agent.
BGC was spun out of Cantor Fitzgerald in 2004.