NEW YORK (AP) — Nearly five months after a major software malfunction at Knight Capital roiled financial markets, the trading firm has agreed to sell itself to a competitor, Getco, in a cash-and-stock deal that the companies value at $1.4 billion.
Knight shareholders can choose $3.75 per share in cash or one share of stock in the new holding company. The per-share price — which is more than the $3.50 per share that Getco offered last month — is a 13 percent premium to Knight's Tuesday closing price. But it's a fraction of the company's worth before the meltdown.
Knight's stock rose 18 cents, or 5.4 percent, to close at $3.51 Wednesday.
Knight Capital Group Inc. has one of the most advanced platforms for trading brokerages. The Jersey City, N.J., company takes stock trading orders from brokers like TD Ameritrade and E-Trade and routes them to the New York Stock Exchange and other exchanges.
Getco's acquisition is a path forward for Knight, which suffered $461.1 million in losses from the August malfunction that sent the shares of dozens of publicly traded companies haywire.
After the problem was traced back to Knight, its shares lost three-fourths of their value in two days, forcing it to cede control of its operations on the New York Stock Exchange and seek a lifeline.