HFT M&A: Why KCG Holdings, Inc. Class A (KCG) and Virtu Financial Inc (VIRT) Shares Are Soaring

Shares of Virtu Financial Inc (NASDAQ:VIRT), and KCG Holdings, Inc. Class A (NYSE:KCG) have spiked by 7% and 11%, respectively, after the former agreed to buy the latter for $20 in cash per share, or around $1.4 billion. Virtu CEO Douglas Cifu said, ‘KCG fits perfectly with Virtu’s strategic priorities to apply our market making and technological expertise to customer wholesale order flow and expand Virtu’s growing agency execution business by offering clients a combination of Virtu and KCG’s superior algorithms and proprietary analytical tools. In addition, there is immediate opportunity for revenue growth and significant cost savings’.

Both boards have unanimously approved the deal, which is expected to close in Q3. Even though it is paying a premium, Virtu shares are up because management expects the deal to deliver 25% accretion to EPS with fully-phased cost savings and capital synergies.

What Does The Smart Money Sentiment Say?

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According to our database of 742 elite funds, 13 and 14 had a bullish position in KCG Holdings, Inc. Class A (NYSE:KCG) and  Virtu Financial Inc (NASDAQ:VIRT) as of the most recent 13-F reporting period, respectively. Both numbers were unchanged from the end of Q3 to the end of Q4.

The Bottom Line

KCG Holdings, Inc. Class A (NYSE:KCG) and Virtu Financial Inc (NASDAQ:VIRT) have surged due to today’s M&A news.  For more reading, check out ‘10 Biggest Insider Trading Scandals Ever to Rock Companies‘.


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