Moody's may upgrade KCG

Moody's Investors Service said it placed the ratings of KCG Holdings Inc. on review for upgrade following news that KCG will be acquired by Virtu Financial Inc.

KCG will be acquired by Virtu at a price of $20 per share for all outstanding shares of KCG for total consideration of $1.4 billion, Moody's explained.

Virtu will finance the acquisition by issuing $750 million of new stock and $650 million of incremental debt, the agency said.

Virtu also intends to refinance KCG's existing debts as part of the transaction, Moody's said.

The acquisition is expected to close in the third quarter of 2017, subject to regulatory approvals, the agency noted.

The ratings on review include KCG's B1 issuer rating and the B1 rating on its senior secured regular bond/debenture, Moody's said.

In the pending acquisition, KCG will become part of a more profitable and more diversified institution, the agency said.

The two market-makers have similar business models offering potential for large cost synergies, Moody's added.

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