BGC Partners, Inc. (NASDAQ: BGCP) ("BGC Partners" or "BGC"), a leading global brokerage company servicing the financial and real estate markets, and GFI Group Inc. (NYSE: GFIG) ("GFI Group" or "GFI"), a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, today announced that they have entered into a tender offer support agreement in which GFI's board of directors unanimously agreed to support BGC's tender offer for all of the outstanding shares of GFI common stock at $6.10 per share in cash.
As part of the agreement, BGC shall designate six out of eight directors of the expanded GFI Board. Pursuant to this agreement, BGC has extended the deadline to February 26, 2015, in order to give all stockholders the opportunity to tender in this final extension. BGC exceeded its 45% requirement with nearly 48% of shares tendered, and because it wants to make closing even more certain, BGC reduced the minimum tender condition to 43%.
Because it will be a controlled company, GFI is expected to operate as a division of BGC, reporting into Shaun Lynn, President of BGC, and its financial results are expected to be consolidated as part of BGC. Going forward, BGC and GFI are expected to remain separately branded divisions. GFI's current Executive Chairman, Michael Gooch, and its current Chief Executive Officer, Colin Heffron, are expected to remain executives of GFI and members of its board of directors.
Howard Lutnick, Chairman and Chief Executive Officer of BGC, said: "We are thrilled to welcome the world class people from GFI into the BGC family. We have an extraordinary opportunity ahead to grow with BGC's strong financial position coupled with both companies' extraordinarily talented brokers and market leading technology. We look forward to delivering strong earnings and cash flow growth to our shareholders going forward."
Shaun Lynn, President of BGC, said: "We are very happy to have reached an amicable conclusion to this long process. We look forward to working with the management team and brokers of GFI as we build what we hope will be the largest and most profitable global wholesale brokerage company. Our transaction will provide substantial benefits to GFI's customers, counterparties, brokers, and other employees, all of whom will benefit from GFI being part of a larger, faster growing, and more diversified investment grade company. We believe that BGC's employees, customers, shareholders, and bondholders will similarly benefit from the combination of these two great organizations."
Mickey Gooch, Executive Chairman of GFI, added: "We are excited to bring these two great companies together. I look forward to building upon our success to create an extraordinary partnership."
Colin Heffron, Chief Executive Officer of GFI, said: "I believe GFI's leading technology and advanced global market position will enhance the services provided to customers of our combined business. More importantly, we look forward to working together as a separately branded division to continue providing market-leading intermediary services and trading technologies."
BGC is pleased that the board of GFI has acknowledged the compelling value of its $6.10 per share all-cash offer. By recommending that GFI stockholders tender their shares to BGC, GFI's directors have recognized that BGC's offer is the best way to maximize shareholder value. BGC has now satisfied all conditions required to complete the proposed transaction, and is prepared to move quickly to close its fully-financed offer. BGC urges GFI stockholders to tender or keep their shares tendered to ensure that they receive the value to which they are entitled. BGC does not expect any further extensions.
Terms of the Agreement
Under the terms of the tender offer agreement, GFI's board recommends that GFI stockholders tender their shares into BGC's existing offer for $6.10 per share in cash. In addition, BGC will appoint 6 members to GFI's expanded 8 person board. At least three of these new board members are expected to be independent directors nominated by BGC.
In connection with the agreement, Messrs. Gooch and Heffron will continue to have management responsibilities at GFI and will enter into employment agreements and receive retention and non-competition bonuses based on certain non-GAAP financial results for GFI. These non-GAAP results are expected to be based on BGC's existing definition of distributable earnings.[1] Messrs. Gooch and Heffron are also expected to sign restrictive covenants including non-competition, non-solicitation and non-hire provisions. Under the terms of the deal, GFI has made various representations and warranties to BGC and agreed to various covenants.
Following the close of the tender offer on the proposed terms, GFI employees with RSUs are expected to receive $6.10 per RSU based on their pre-existing vesting schedules.
New Offer Deadline
The expiration date for the tender offer is now 5:00 PM ET time on February 26, 2015. As of 5:00 PM ET on February 19, 2015, approximately 43.3 million shares were tendered pursuant to the offer. The 43.3 million tendered shares, together with the 17.1 million shares of GFI common stock already owned by BGC, represent approximately 47.5% of GFI's outstanding shares.
Certain shareholders of GFI who entered into a support agreement with the CME in connection with the previously terminated transaction, including Jersey Partners Inc., GFI's largest stockholder, and certain members of GFI's management team and their respective affiliates, are not expected to tender their shares at this time. However, the agreement provides for a mechanism whereby BGC will acquire their shares upon the earlier of the cessation of the restrictions under the CME support agreement or one year from the closing date of the tender offer agreement for $6.10 in cash and BGC common stock, based on BGC's current stock price. Any other GFI stockholders that do not tender by the offer deadline may not have an opportunity to receive the $6.10 per share in cash until the restriction lapses (currently on or about January 30, 2016.)
Stockholders with questions about how to tender their shares may call Innisfree M&A Incorporated, BGC's Information Agent, toll-free at (888) 750-5884.
BGC's financial advisor and dealer manager for the tender offer is Cantor Fitzgerald & Co. and its legal advisor is Wachtell, Lipton, Rosen & Katz.
Jefferies LLC is acting as financial advisor to GFI Group and Willkie Farr & Gallagher LLP is acting as legal advisor to GFI Group. Greenhill & Co. is acting as financial advisor to the Special Committee of GFI's Board of Directors and White & Case LLP is acting as the Special Committee's legal advisor.