GFI's biggest shareholder stands with CME

January 27, 2015 01:08 PM
Text of Michael Gooch letter to GFI shareholders

Michael Gooch, in his capacity as controlling stockholder of Jersey Partners Inc. ("JPI"), a 36%+ stockholder of GFI Group Inc. ("GFI") (NYSE: GFIG), today issued an open letter to GFI shareholders in support of the higher, amended offer from CME Group (Nasdaq: CME) to acquire all outstanding shares of GFI for $5.85 per share.  Mr. Gooch is also Executive Chairman of GFI.

The full text of the letter follows:

Michael Gooch
c/o Jersey Partners Inc. 
569 Middle Road 
Bayport, NY 11705

January 27, 2015

To My Fellow GFI Stockholders:

I write in my capacity as the controlling stockholder of Jersey Partners Inc. ("JPI"), a 36%+ stockholder of GFI Group Inc. ("GFI").

CME Group Inc. ("CME") is offering GFI stockholders $5.85 per share in a consensual, tax‑efficient merger transaction that is ready to close (the "CME Merger").  BGC Partners, Inc. ("BGC"), on the other hand, has made a highly conditional hostile tender offer to acquire all the outstanding shares of GFI's common stock for $6.10.  You can opt for a "bird in the hand" with CME, or hold out for "BGC in the bush."

As part of the CME Merger, Colin HeffronNick Brown and I are buying GFI's interdealer brokerage business (the "IDB Business") for approximately $287 million.  We are also taking on approximately $82 million in deferred compensation owed to GFI employees, bringing the total consideration we are paying to approximately $369 million.  Furthermore, the management consortium has made additional financial and commercial commitments to CME that are designed to maximize value for GFI shareholders.

The $5.85 price that will be paid for your shares as part of the CME Merger—which has received all the necessary regulatory approvals to close and is on the table for your vote this coming Friday—implies a market cap of $743 million for GFI.  That is an 88% premium compared to GFI's share price on July 29, 2014, the day before the initial announcement of the CME Merger.

Colin, Nick and I will be paid only $4.44 for each of our GFI shares being sold through JPI.  By taking this reduced sale price—and passing up a substantial portion of the premium that you and the other GFI stockholders will receive in the CME Merger—we have improved the value for all of GFI's stockholders.

My ex-wife, Diane Gooch, is a significant stockholder of GFI (through JPI) and is also willing to take a reduced sales price for her more than 15 million shares.  She is not part of the group purchasing the IDB Business, and her financial interests are completely aligned with yours, but she has agreed to accept just $5.46 for each of her GFI shares that will be sold through JPI.  That is her vote of confidence in the CME Merger and shows how much she wants to see the CME Merger close.

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