ITG agrees to billion dollar Virtu takeover deal

ITG agrees to be acquired by high speed trading firm Virtu for $30.30 a share.

Independent brokerage ITG has agreed to be acquired by high speed trading firm Virtu for $30.30 a share, in a near-$1 billion deal showing increasing consolidation between institutional brokerages.

Talks between the two firms first emerged at the beginning of October. The acquisition is the latest high-profile purchase for Virtu after it took over proprietary trading firm Knight Capital Group (KCG) in 2017 for $1.4 billion.

The deal with ITG represents a 40% premium on the average closing share price of ITG of $21.55 in the month prior to the news reports of the potential sale, potentially valuing ITG at just under $1 billion.

“ITG has made tremendous progress in executing on its Strategic Operating Plan over the past two years, and the agreement with Virtu is a result of the dedicated efforts of our management team and employees,” said Minder Cheng, chairman of the board of directors, ITG.

“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. The combination of Virtu and ITG will create an industry-leading financial technology franchise with true global capabilities and scale.” 

Virtu stated the acquisition is a ‘natural next step’ in its goal to offer a full range of agency services, including transparent trading and workflow technology, analytics and liquidity solutions.

“The combination announced today brings together complementary strengths that amplify our ability to help our clients source liquidity and improve their workflow,” said Douglas Cifu, Virtu’s chief executive officer.

“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.

“This combination will leverage Virtu’s financial technology – the same technology that drives our market making performance – to optimise all aspects of the business, from order routing and algo performance to middle- and back-office efficiency.”

JP Morgan is serving as the financial advisor and Wachtell, Lipton, Rosen & Katz will provide legal counsel to ITG.

ITG recently reported an adjusted net income of $5.4 million in the third quarter, compared to the adjusted net loss of $3.6 million it suffered during the same period last year.

It reported a net loss of $2 million in North America for the quarter with revenues at $61.6 million, compared to a net loss of $6.6 million last year. Meanwhile in Europe and Asia-Pacific, net income was up $6.9 million to $58.5 million.