The conflict between CME Group Inc. (CME) and BGC Partner Inc. (BGCP) to acquire the fifth-largest global interdealer broker – GFI Group Inc. (GFIG) – continues unabated.
On Jan 20, CME Group raised its offer to $5.85 a share in cash and stock, about 4.5% higher than the previous value. This hike was made to match a similar offer made to GFI Group by BGC Partner earlier this week. CME Group’s latest offer is at a 28.6% premium to the initial offer of $4.55 a share made in July last year.
The bidding battle intensified yesterday with BGC Partner raising its bid to $6.10 a share giving a tough competition to CME Group. With GFI Group’s 127.5 million shares outstanding, the new bid price would amount to $777.75 million, significantly higher than the $745.87 million quoted by CME Group.
Additionally, BGC Partner was also ready to pay an additional 10 cents a share (offer climbing to $6.20 a share) had GFI Group agreed to their bid price on that day itself.
This tug of war between CME Group and BGC Partner to acquire GFI Group has been going on ever since the former signed a deal in July. In the end, GFI Group appears to be gaining from the tussle of the two bidders. The latest price of $5.85 per share from CME Group also represents an 88% premium over GFI Group’s closing price of $3.11 on Jul 29, 2014, when the deal was initially inked.
GFI Group’s management has stressed that this is an all-inclusive offer. Hence, the additional consideration of $40 million that was promised before will no longer be valid. CME Group also informed that as a part of the revised offer it will no longer pay any additional consideration.
As the bidding war heats up, both CME Group and BGC Partner will be under pressure. GFI Group will be holding a special meeting with its shareholders on Jan 27, 2015 to vote on the CME Group transaction.
The price hike by CME Group shows how keen the company is in making the deal go through given the long-term expansion and growth strategies that it promises. However, it is uncertain whether CME Group and GFI Group’s previously announced deal would ultimately materialize in the light of the recently upped offer from BGC Partners.
Currently, CME Group holds a Zacks Rank #2 (Buy). Another stock in the securities exchange sector with the same Zacks Rank as CME Group is MarketAxess Holdings Inc. (MKTX).
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