Knight Capital Group Announces Agreement To Acquire The Futures Division Of Penson Financial Services, Inc
Knight Capital Group, Inc. (NYSE Euronext: KCG) today announced that it has agreed to acquire certain assets and liabilities of Penson Futures, the futures division of Penson Financial Services, Inc., a subsidiary of Penson Worldwide, Inc. (NASDAQ: PNSN). The terms of the acquisition call for $5 million in cash, approximately half of which covers exchange memberships and equipment, plus potential earn-outs based on financial results in the three-year period following the close.
Penson Futures provides futures execution, clearing and custody services to facilitate transactions among brokers, institutions and non-clearing Futures Commission Merchants (FCMs) on major U.S. and European futures and options exchanges. Penson Futures also offers risk management and consultation services and operates an electronic futures trading platform for professional traders and individual investors.
"Futures trading is increasingly moving toward an electronic, exchange-based model," said Tom Joyce, Chairman and Chief Executive Officer, Knight Capital Group. "With the acquisition of Penson Futures, Knight fills a strategic gap in the client offering with a top 30 FCM in the U.S. We're excited to extend our offering to include futures with a range of products from physical commodities to financial instruments by bringing aboard a quality team and applying our own considerable strengths."
"The Knight acquisition of Penson Futures provides a powerful combination of financial strength, technical expertise and futures market knowledge," said John Streich, Chief Executive Officer of Penson Futures. "This combination brings the futures industry exactly what they need at this time - strong independent futures execution and clearing."
Penson Futures is currently a member of the Chicago Board of Trade, the Chicago Mercantile Exchange, the Kansas City Board of Trade, NYSE Euronext LIFEE, the Minneapolis Grain Exchange, NYMEX, COMEX, ICE Futures US, ICE Clear Europe, NYSE LIFFE, One Chicago and LCH.Clearnet.
The acquisition, which is subject to customary closing conditions and regulatory approvals, is expected to be completed in the second quarter of 2012. Upon the close of the acquisition, the FCM will operate as a division of Knight Execution & Clearing Services LLC. Penson expects to transfer client assets within one day of the
close. The acquisition is expected to be earnings neutral in year one and modestly accretive thereafter.
The legal advisor to Knight on the transaction is Wachtell, Lipton, Rosen & Katz. The advisors to Penson are Morgan Lewis & Bockius LLP as well as Moelis & Co. and Financial Technology Partners.