KCG reports 82.3 million shares tendered at expiry of Dutch auction tender offer


KCG Holdings, Inc. Class A (NYSE:KCG) today announced the preliminary results of its “modified Dutch auction” tender offer, which expired on June 2, 2015 at 5:00 p.m., New York City time.

Based on the preliminary count by Computershare, the depositary for the tender offer, a total of approximately 82.3 million shares of KCG’s Class A Common Stock were properly tendered and not properly withdrawn at or below $14.00 per share, including approximately 9.0 million shares that were tendered by notice of guaranteed delivery.

In accordance with the terms and conditions of the tender offer, and based on the preliminary count by the depositary, KCG expects to repurchase 23.6 million shares at $14.00 per share on a pro rata basis, except for tenders of odd lots, which will be accepted in full, for a total cost of approximately $330 million, excluding fees and expenses related to the tender offer.

As such, KCG has been informed by the depositary that the preliminary proration factor for the tender offer is approximately 28.7%. The shares expected to be repurchased represent approximately 22% of KCG’s Class A Common Stock outstanding excluding restricted stock units as of May 7, 2015.

In the company’s Q1 earnings report which was issued on May 1 this year, KCG provided full details of its Dutch Auction tender offer, outlining that subsequent to the first quarter of 2015, on April 2, 2015, KCG’s board of directors authorized an expanded share repurchase program of up to $400 million of KCG common stock and warrants (including the $55 million of remaining capacity under the previously authorized repurchase program).

As part of this authority, KCG expected to commence, on May 4, 2015, its “modified Dutch auction” tender offer that would remain open for at least 20 business days. Under the terms of the tender offer, stockholders had the opportunity to sell stock to KCG at a specified price per share not less than $13.50 and not greater than $14.00.

Upon expiration of the tender offer, and based on the number of shares tendered and the prices specified by the tendering stockholders, KCG determined the lowest price within the range that allowed it to repurchase up to $330 million of KCG’s Class A common stock (or all Shares properly tendered and not properly withdrawn if the tender offer is not fully subscribed).

All shares purchased by KCG in the tender offer were purchased at the same price. If the aggregate purchase price for shares tendered at or below the specified purchase price exceeds $330 million, allocations will be made on a pro rata basis from stockholders tendering at or below the purchase price, except as otherwise specified in the Offer to Purchase.

The earnings report stated that the tender offer range represents a premium of 5 percent to 9 percent above the closing price of KCG’s common stock on the New York Stock Exchange of $12.84 on April 30, 2015. On the basis that the offer was fully subscribed, KCG’s intention was to repurchase a minimum of 23.6 million shares, or 22 percent of its total shares outstanding excluding restricted stock units (RSUs) as of April 29, 2015. Assuming the tender offer is fully subscribed, approximately $70 million in authority will remain in the share repurchase program.

The preliminary information contained in this particular announcement regarding the results of the tender offer is subject to confirmation by the depositary and is based on the assumption that all shares tendered by notice of guaranteed delivery will be delivered within the prescribed three trading day settlement period.

The final number of shares to be purchased and the final purchase price will be announced following the completion by the depositary of the confirmation process. Payment for the shares accepted for purchase pursuant to the tender offer, and the return of all other shares tendered and not purchased, will occur promptly thereafter.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is the dealer manager for the tender offer. Georgeson Inc. is the information agent and Computershare is the depositary for the tender offer.

For the official announcement from KCG, click here.

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KCG reports 82.3 million shares tendered at expiry of Dutch auction tender offer

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