New Jersey-based Knight Capital Group has signed an agreement to acquire agency-only trade execution firm EdgeTrade in a cash and stock deal worth around $59.5 million, reported Finextra today.
Under the deal Knight Capital is expected to pay $29.5 million in cash and 2.3 million shares for New York-based EdgeTrade. Knight Capital says the deal combines EdgeTrade's client order-driven algorithms with its trade execution services and will strengthen its offering at a time when, according to industry analysts, approximately 94% of buy-side firms report they are using equity algorithms, up from 77% in 2006.
"As algorithmic trading increases in a fragmented market environment, the acquisition of EdgeTrade will enhance our trade execution services and provides us with a significant advantage as demand continues to grow for sophisticated, next generation algorithms," says Knight Capital chairman and CEO, Thomas Joyce. "Beyond the immediate opportunity to cross-sell EdgeTrade's algorithms to clients through Knight Direct, our direct market access platform, we anticipate demand for new algorithms that cover international equities as well as additional asset classes such as foreign exchange and options."
The acquisition is expected to be completed in the first quarter of 2008, according to Finextra. EdgeTrade was established in 1996 and currently employs 43 staff.