BGC to GFI shareholders: vote no on CME bid

January 28, 2015 10:46 AM

NEW YORK, Jan. 28, 2015 -- BGC Partners, Inc. (NASDAQ: BGCP) ("BGC Partners," "the Company," or "BGC"), a leading global brokerage company servicing the financial and real estate markets, today issued the following letter to shareholders of GFI Group Inc. (NYSE: GFIG) ("GFI Group" or "GFI") regarding its proposed merger with CME Group Inc. (NASDAQ: CME) ("CME").  

PROTECT THE VALUE OF YOUR INVESTMENT IN GFI 
VOTE AGAINST THE INFERIOR $5.85 CME-GFI MANAGEMENT STOCK AND 
CASH TRANSACTION 
TENDER YOUR SHARES TO RECEIVE BGC'S SUPERIOR
$6.10 PER SHARE ALL-CASH OFFER

January 28, 2015

Dear Fellow GFI Shareholders:
We urge you to protect the value of your investment in GFI Group by voting AGAINST all of the proposals at the special meeting of GFI shareholders scheduled for January 30th.  

In a final desperate attempt to protect their conflicted and self-interested transaction, GFI management is asking you to accept $5.85 per share in cash and stock, which is $0.25 less than BGC's $6.10 all-cash offer.  They want you to accept this obviously lower value for your shares in order for GFI management to purchase the brokerage business and realize the tax benefits that we believe accrue almost entirely to them.  In contrast, BGC's $6.10 per share fully financed, all-cash tender offer provides ALL GFI shareholders the opportunity to realize superior value and immediate liquidity at closing and is free of the conflicts of interest in the CME-GFI management buyout proposal.  

Time is short.  We urge you to use BGC's GOLD proxy card TODAY to vote AGAINST the CME-GFI management transaction by telephone or by Internet.  You may also vote "against" all proposals using the proxy materials provided by GFI.  In addition to your vote AGAINST the proposed CME-GFI management transaction, we also urge you to tender your shares into our clearly superior offer of $6.10 per share to receive the higher value to which you are entitled.

As you make your decision, consider the following important facts regarding BGC's offer:

  • Substantial Premium. BGC's all-cash offer of $6.10 per share represents a premium of $0.25, or approximately 4%, to the $5.85 per share stock and cash offer from CME and GFI management and a premium of more than 96% to the price of GFI shares on July 29, 2014, the last day prior to the announcement of the original CME-GFI management transaction.
  • Both Leading Independent Proxy Advisory Firms Support BGC by Recommending Against CME-GFI Management Proposal. Leading independent proxy advisory services firms, Institutional Shareholder Services ("ISS") and Glass, Lewis & Co., LLC ("Glass Lewis"), both recommend that GFI shareholders vote AGAINST the CME-GFI management transaction.

In a report, ISS highlighted the fact that the CME offer is "economically inferior" to BGC's offer and recommended that "shareholders should vote AGAINST the proposed transaction on its current terms….and, if that offer does not improve to at least parity with the BGC bid, tender into the BGC offer instead." Separately, Glass Lewis cited the "flawed and conflicted" nature of the process undertaken by the GFI board in making its recommendation that shareholders vote AGAINST the proposed CME-GFI management transaction.

  • Committed to Closing. BGC first began acquiring shares of GFI more than a year before the CME-GFI management deal was announced. Since that announcement, we have dedicated significant time, energy, and capital, which demonstrate an unwavering commitment to completing our tender offer. BGC has received all the necessary regulatory approvals required to complete the proposed transaction and our $6.10 per share all-cash offer is superior to the $5.85 stock and cash offer from CME and GFI management. 

GFI'S BOARD HAS FAILED TO ACT IN THE BEST INTEREST OF SHAREHOLDERS. VOTE AGAINST THE CME-GFI MANAGEMENT TRANSACTION TODAY. TENDER YOUR SHARES TODAY 

The actions of the GFI board have demonstrated remarkably poor corporate governance and raise serious questions with respect to their fiduciary obligations to GFI shareholders.  In one key instance, upon review of BGC's January 20 offer letter and tender offer agreement, the Special Committee of the GFI board (who are all outside directors) made the determination that BGC's offer "could reasonably be expected to lead to a superior proposal" and requested that GFI convene a meeting of the full board to act on the recommendation.  Following that determination and request, the full board – including GFI management – failed to act on this request to even convene a meeting by the deadline of the offer and, when they finally did meet, chose to ignore the recommendation of the Special Committee.  Simply put, GFI's board has the ability to take action in respect of our clearly superior offer, but has purposely failed to do so.

In addition to offering GFI shareholders superior value, we have made numerous attempts at constructive dialogue to reach a negotiated agreement with GFI's Special Committee.  The full GFI board, under the influence of conflicted insiders, has derailed any attempt at a negotiated transaction by failing to agree to an ordinary NDA agreement, and by insisting that BGC sign long-term, no-poach agreements that only serve to benefit GFI management in their attempt to purchase the wholesale brokerage business at a discounted rate.  Nonetheless, we have made it clear that we are comfortable proceeding without further due diligence because of our detailed knowledge of the financial brokerage business, so long as GFI management does not take any interim steps to materially damage the business.  

We believe the priorities of GFI's management and board are in conflict with those of all of GFI's shareholders.  We urge you to vote AGAINST the CME-GFI management transaction today and tender your shares in favor of the superior BGC offer to protect the value of your investment.  If you need any assistance voting or tendering your shares, please call Innisfree M&A Incorporated, toll-free at 888-750-5884.

Thank you for your support,

Howard W. Lutnick
Chairman and CEO

Shaun D. Lynn
President

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