Global broker BGC Partners has launched a bid for all of the outstanding shares of GFI Group, offering $5.25 per share in a transaction that values the business at around $675m.
The offer represents more than a 15% premium on the $4.55 per share deal the Chicago-based exchange and GFI agreed on July 30, and more than a 68% premium to the price of GFI's share on July 29.
CME Group had agreed to acquire GFI Group before spinning off the IDB to management and retaining the group's other assets, which include Trayport and Fenics.
"Our offer provides a materially higher, all cash price to GFI shareholders, delivering a substantial premium and immediate liquidity," said Howard Lutnick, chairman and CEO of BGC.
"We believe that GFI's customers and brokers would benefit from GFI being part of a larger, better capitalized and more diversified company.
"We are confident that a combination of GFI and BGC will produce increased productivity per broker, meaningful synergies and significant cost savings."
If the merger between BGC and GFI goes forward, BGC would become one of the world's largest brokers. The counter-offer could create a bidding war for GFI Group between CME and BGC.
CME plans to sell off GFI’s brokerage and clearing services to a consortium of GFI managers for $165m, plus $63m in liabilities, which could effectively take GFI’s potentially lucrative swap execution facility (Sef) business private.
Both CME and GFI face legal action from a GFI stockholder and are accused of deliberately undervaluing the broker’s shares.
However BGC plans to bid for 100% of all the outstanding shares of GFI, which will mean the merger will include GFI’s brokerage and clearing business, as well as its Sef.
According to one source close to the matter: “It seems to me the whole IDB industry is in play for consolidation. Could be an interesting year.”
BGC plans to take its all-cash offer directly to shareholders, rather than through the management.
In a letter to the board of directors of GFI, Shaun Lynn, president of BGC wrote: “Given your lack of response to our offers, and our belief that the pending transaction deprives GFI shareholders of the opportunity to realize appropriate value, particularly given the significant discount agreed to with respect to the purchase of the brokerage and clearing business, we intend to make an offer directly to the GFI shareholders.”
The IntercontinentalExchange was also said by sources to be interested in acquiring Trayport but has not bid or declined to comment on the rumours.
BGC currently owns around 13.5% of GFI Group's common stock.
The US broker has also said it is willing to negotiate with the both the GFI management and the CME regarding a consensual transaction.
“We are open to discussing and addressing social issues such as senior management team composition and other concerns that you may have. We are available to commence such discussions immediately and hope that you accept our invitation to do so,” Lynn added.