North American derivatives marketplace CME Group Inc. (“CME Group” or “CME”) and interdealer broker GFI Group Inc. (“GFI Group” or “GFI”) announced earlier today they have revised their definitive agreements to increase the consideration payable to GFI Group stockholders to $5.60 per share from $5.25 per share, to be paid in a mix of shares of CME Group Class A common stock and cash.
The new offer represents more than an 80% premium above the closing price of $3.11 per share of GFI Group common stock on July 29, 2014, the last day of trading before the announcement of the CME deal.
Under the terms of the revised CME transaction, the purchase price to be paid by a private consortium of GFI Group management (the “GFI Group Management Consortium”), led by current Executive Chairman Michael Gooch, CEO Colin Heffron and Managing Director Nick Brown, for GFI Group’s wholesale brokerage business was increased to approximately $282 million, up from $254 million in cash, along with the assumption, at closing, of approximately $77 million of unvested deferred compensation and other liabilities. CME Group is also contributing $9.5 million in additional stock consideration to GFI shareholders.
Together, these new contributions deliver an approximately $37 million increase in purchase price to all GFI Group stockholders, excluding the shares held by the GFI Group Management Consortium through Jersey Partners Inc., which will not share in the $0.35 per share increase announced today and will only receive $5.25 per share.
The revised terms of the CME transaction have already received the approval of the Board of Directors of GFI Group upon the unanimous recommendation of a Special Committee comprised solely of independent and disinterested directors, and by the Board of Directors of CME Group.
The transaction has yet to be approved by GFI Group’s stockholders.
GFI Group will hold a special meeting of its stockholders on January 27, 2015 to vote on the CME transaction. If this approval is received, the transaction would be closed shortly thereafter.
If GFI Group stockholder approval is obtained, the parties expect the transaction to close shortly thereafter.
The news of the changed offer comes less than a fortnight after CME and GFI announced they had received the necessary regulatory nod of approval from regulators. The initial price of $5.25 per share was a match to BGC’s offer for GFI, with the new payable consideration definitely setting CME’s offer apart from that once launched by BGC.