KCG Holdings, Inc. Class A (NYSE:KCG) on Friday announced the completion of the sale of spot FX trading venue KCG Hotspot to BATS Global Markets. At the close, based on the $365 million purchase price, KCG received cash proceeds representing approximately $225 million on an after-tax basis.
LeapRate first reported KCG’s intention to sell Hotspot FX at a very healthy time for the firm, having paid off its commitment of $535 million to GETCO well ahead of schedule, and having retained the prominent ECN until a good deal was able to be reached as opposed to selling it during the time at which the firm needed to raise funds following the losses sustained in August 2012 when a test algorithm was connected in error to a production server, executing a series of trades which put the firm into a very grave situation.
KCG recovered remarkable and has completed the sale of Hotspot FX at a very solvent time, adding to the firm’s strength.
KCG can receive up to approximately $70 million in additional consideration in the three-year period following the close pursuant to a tax sharing arrangement.
The additional consideration will appear on the balance sheet at its discounted fair value. As previously announced, with the close of the transaction, KCG’s tangible book value will increase by approximately $2.00 per share. In addition, as a result of the sale, KCG’s headcount will be reduced by approximately 40 full-time employees.
KCG was advised on the transaction by Jefferies LLC and Sullivan & Cromwell LLP.
For the official announcement from KCG, click here.