High-frequency trading firm Virtu Financial Inc. is buying agency broker Investment Technology Group Inc. (ITG), both based in New York, in a US$1-billion all-cash transaction.
The deal is designed to build scale in Virtu’s institutional agency operations while diversifying its overall business. Virtu’s CEO, Doug Cifu, will remain CEO of the combined company.
“Virtu’s focus and investment in our agency offering is evidenced by the continued growth in our business and the strong uptick we’ve seen this year and through October. The combination announced today brings together complementary strengths that amplify our ability to help our clients source liquidity and improve their workflow,” said Cifu in a statement.
“We are fully committed to growing and improving the complete agency execution offering that ITG’s clients use every day — liquidity, execution services, workflow technology and analytics,” he added. “This combination will leverage Virtu’s financial technology — the same technology that drives our market making performance — to optimize all aspects of the business, from order routing and algo[rithm] performance to middle- and back-office efficiency.”
Virtu is funding the acquisition with a US$1.5-billion debt financing arranged by Jeffries Group LLC and Royal Bank of Canada, both of which also provided financial advice to the firm. The deal has been approved by the boards of both companies; and, is expected to close in the first half of 2019, subject to ITG shareholders’ and regulators’ approval.
“After careful consideration, ITG’s board of directors determined that the proposal from Virtu, which provides an immediate and significant cash premium, offers the most value for ITG stockholders,” said Minder Cheng, chairman of ITG’s board, in a statement. “The combination of Virtu and ITG will create an industry-leading financial technology franchise with true global capabilities and scale.”