KCG Holdings, Inc. (NYSE: KCG) today announced it has entered into a definitive agreement to sell KCG’s spot FX trading venue, KCG Hotspot, to BATS Global Markets. The transaction is expected to be completed in the second quarter of 2015.
LeapRate broke the news in October that KCG was looking to sell its Hotspot FX ECN, and this transaction demonstrates that the firm found a suitable firm for the acquisition in a relatively short space of time.
Under the terms of the agreement, KCG will receive $365 million in cash upon the close of the transaction. In addition, the parties have agreed to share certain tax benefits, which could result in further payments to KCG of up to approximately $70 million in the three-year period following the close. Upon the close, the transaction is expected to increase KCG’s tangible book value by approximately $2.00 per share.
Daniel Coleman, Chief Executive Officer of KCG, remarked, “The sale of Hotspot is expected to realize significant value for KCG’s shareholders while simultaneously allowing us to continue to focus on the expansion of our global FX client market making business. Upon completion of the deal, our focus will be on putting the cash to good use for KCG and our shareholders.”
Joe Ratterman, Chief Executive Officer of BATS, said “Hotspot is an innovative foreign exchange leader which will become an important part of our expanding global footprint, and we are excited to welcome their highly-regarded team to BATS Global Markets. Their FX expertise and reputation, along with our technology excellence and global presence, will make for a powerful combination and enable us to have a meaningful and significant impact on the direction of the FX market in the years to come.”
Coleman continued, “After conducting a thorough and competitive process, it became clear that BATS is the right strategic partner for Hotspot, as well as its clients and employees. BATS and Hotspot share a commitment to technological excellence. This, coupled with the experience, resources and insights derived from operating global multi-asset class markets, ensures that BATS is well positioned to further accelerate Hotspot’s growth.”
Hotspot caters to a broad group of trading participants, providing institutions, dealers and retail broker clients with spot foreign exchange executions through an advanced, fully electronic platform.
For the official announcement from KCG, click here.