(Bloomberg) — GFI Group Inc. surged 11 percent yesterday as a rival brokerage purchased shares before publicly disclosing a hostile takeover offer.
BGC Partners Inc. today offered to buy the company for $5.25 a share, seeking to dislodge CME Group Inc.s July agreement to purchase New York-based GFI. Between Sept. 4 and the announcement, BGC had acquired more than 17 million GFI shares, including more than 3.5 million yesterday, according to Securities and Exchange Commission filings.
See Also:BGC Announces Bid to Buy Remaining GFI Group Shares
This is really how you do it, especially in a smaller company, said Erik Gordon, a professor at the University of Michigans business and law schools. You tip-toe up to the threshold and then you sprint and you buy as much as you can so that you can announce Hi, we own a significant amount of your stock, and were going to take you over.
BGC wants to get its hands on a company that plays an instrumental role in connecting energy traders in Europe. That business had already drawn interest from CME, which is seeking to bolster its competitive position against Intercontinental Exchange Inc., which owns the largest energy market in the region.
GFIs stock jumped 11 percent yesterday to $5.03, the highest price since April 2011. Almost 4.7 million shares traded, more than nine times the 2014 average. Today, the shares rose 13 percent to $5.69.
Lutnicks Brokerage
BGC said today it will make a $675 million cash offer for GFI. The New York-based brokerage run by Howard Lutnick, which said it now owns about 13.5 percent of GFI, sent a letter to GFI yesterday to notify its board of the tender offer, it said in a statement.
GFI rallied a record 44 percent on July 30 as CME agreed to buy it for $580 million. BGCs offer of $5.25 a share is 15 percent higher than that of CMEs all-stock transaction.
The CME deal also involves breaking up GFI, with managers led by Chairman Michael Gooch buying the wholesale brokerage and clearing unit for $165 million plus the assumption of $63 million in liabilities.
BGC said the CME transaction deprives GFI shareholders of the appropriate value of their investment, according to a statement released today.
BGC remains willing to engage directly with the Board of GFI Group to negotiate a transaction, according to the statement. However, GFI Groups prior refusal to engage in such discussions requires BGC to take its superior, all-cash offer directly to shareholders.
Anita Liskey, a spokeswoman for Chicago-based CME Group, and Patricia Gutierrez of GFI declined to comment. Robert Hubbell of BGC didnt return a call for comment.
