Bidding war for interdealer broker GFI breaks out as CME Group matches BGC offer

Well a good old fashioned shootout is taking place for control of the GFI Group, an interdealer derivatives broker serving banks and other financial institutions from around the world.

First, the CME Group made an offer to buy the 83% of GFI it didn’t already own for $4.55 per share back in July. That bid was topped by GFI’s rival BGC Partners which made an all-cash bid for GFI in September.

Well it has taken some time, but the CME did not give up and has raised its bid to match BGC’s, at $5.25 per share, valuing GFI (NYSE:GFIG) at about $675 million.

It remains unclear why shareholders would take CME’s new-and-improved bid over that of BGC (NASDAQ:BGCP), since they are technically for the same price. And BGC’s bid is all cash, while CME’s new bid is a combination of cash and stock – and at that mostly stock. In M&A, cash is king.

Some more details – as part of the revised transaction, GFI management led by current Chairman Michael Gooch, CEO Colin Heffron and MD Nick Brown will buy GFI’s wholesale brokerage business for an improved price of $254 million, up from $165 million offered in July. This $89 million increase is being passed along in its entirety by CME Group to GFI Group stockholders, accounting for the increase in total consideration to GFI stockholders from $4.55 to $5.25 per share.

CME Group will retain Trayport, which provides trading software in the European energy markets, and FENICS, which provides price discovery, analytics, risk management and workflow connectivity services for the global OTC FX options markets.

For the official CME Group announcement on is revised bid for GFI click here.

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