Bloomberg poses the question: Was the Knight Deal the Best
for Stakeholders?
Knight Capital Group Inc. (KCG) rejected a last-minute, $500
million rescue-loan offer from Citadel LLC on Aug. 5 as it worked on a
competing plan from a group of investors, said two people with knowledge of the
matter.
The loan terms would have given Citadel a minority stake in
Jersey City, New Jersey-based Knight’s stock and an interest in the market
maker’s HotSpot foreign-exchange subsidiary, said the people, who spoke on
condition of anonymity because the talks were private. Citadel, the $12.5
billion hedge fund run by billionaire Ken Griffin, competes with Knight’s
market-making and electronic-trading business.
Citadel, which had walked away from a previous round of
talks on Aug. 4, made the offer as Knight Capital was completing a $400 million
capital infusion from a group of investors led by Jefferies Group Inc. (JEF)
That transaction, which was completed yesterday, gives the new investors rights
to take a more than 70 percent stake in Knight. In Citadel’s offer, shareholder
dilution would have been between 10 percent and 20 percent, according to
another person familiar with the offer.
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