GFI Group, a US-based provider of wholesale brokerage, electronic execution and trading support products for financial markets, has agreed to acquire The Kyte Group and Kyte Capital Management (together 'Kyte').
UK-based Kyte, which is a member of various exchanges including NYSE Euronext, NYSE LIFFE and Eurex, provides clearing, broking, settlement and back-office services to proprietary traders, brokers, market makers and hedge funds. In addition, Kyte provides seed capital to start-up trading groups, small hedge funds, market-makers and individual sole traders.
Upon the closing of the transaction, GFI expects to pay approximately GBP38.3m, to acquire a 70% equity ownership interest in Kyte. The purchase price will be made up of approximately GBP22.4m in cash, financed from GFI’s internal cash resources, and shares of GFI common stock with an approximate value of GBP15.9m.
The final purchase price will be subject to various adjustments, based on the price of GFI stock and the amount of Kyte’s surplus capital at closing and the satisfaction of certain legal, financial and other criteria.
In addition, GFI will acquire the residual 30% equity interest in Kyte and its affiliates for a further cash payment, which will be calculated based on the performance of Kyte during the three year period ending June 30, 2013.
The transaction, which has been approved by the Financial Services Authority, is expected to close in July 2010 upon satisfaction of certain customary conditions.
Michael Gooch, chairman and CEO of GFI, said: “We believe the acquisition of Kyte and, in particular, its expertise in the listed derivatives markets and its proven risk management and clearing platforms, will position GFI well in an environment favoring standardized, exchange traded products.
“David Kyte is a highly respected entrepreneur in the London trading community and we are delighted to be bringing his innovative business into the GFI group of companies.”
David Kyte, founder of Kyte, said: “Teaming up with GFI will allow Kyte to benefit from GFI’s greater scale and resources and position Kyte to profit from attractive growth opportunities in its core markets in the future.”