Knight Capital Group to acquire Libertas Holdings in deal valued at $75 million

By Devika Patel

Knoxville, Tenn., May 6 - Knight Capital Group, Inc. announced in a press release that it has agreed to acquire Libertas Holdings, LLC for approximately $50 million in cash and $25 million in unregistered stock, payable upon closing.

The agreement also includes a potential earn-out of up to $75 million of unregistered Knight stock based on future performance of Libertas in the three-year period following the close.

"Libertas is a fast-growing, fixed income boutique that provides buy-side clients with well-respected proprietary research and much-needed liquidity in the trading process," Knight chairman and chief executive officer Thomas M. Joyce said in the release. "Since its founding, Libertas has exhibited steady revenue growth and trading volumes that belie the firm's modest size. Following the deal close, Knight will have a powerful equity and fixed income distribution network."

Founded by CEO Gary Katcher in 2002, Greenwich, Conn.-based Libertas is a privately held, riskless principal, fixed income broker-dealer specializing in high-yield, distressed, asset-backed and mortgage-backed securities. The firm has 59 employees and satellite offices in New York, London and Hong Kong.

Upon closing, Katcher will report to Joyce and become a member of the Knight management team.

The acquisition is expected to be cash-flow positive immediately following the closing of the transaction and accretive to earnings per share in 2009.

Upon closing, Libertas will operate as a wholly owned operating subsidiary of Knight Capital Group.

Knight's advisers are Sandler O'Neill + Partners and Skadden, Arps, Slate, Meagher & Flom LLP. The adviser to Libertas is Proskauer Rose LLP.

Based in Jersey City, N.J., Knight Capital Group is a financial services firm that provides electronic and voice access to the capital markets across multiple asset classes for buy-side, sell-side and corporate clients.

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