BGC Presents Offer for GFI Group

In a letter addressed to the board, BGC said that it would offer to purchase 100 percent of outstanding stock in GFI for $5.25 per share, an all-cash alternative to the CME Group offer of $4.55 per share in CME Group Class A Common Stock. The two-step process by which CME Group planned to acquire GFI included a stage where the wholesale brokerage and clearing arms would be hived off from the firm, and sold back to a private consortium including members of the current board of GFI. CME Group would then keep the Trayport and Fenics software businesses.

The potentially hostile offer is outlined in strong language from a letter signed by BGC president Shaun Lynn, and addressed to the GFI board, which was publicly released by BGC earlier today. The company, which owns approximately 13.5 percent of the firm already, says it has approached GFI numerous times in the past regarding a potential merger, and it was "surprised" to hear of the deal with the CME Group.

"We believe that GFI's customers and brokers would benefit from GFI being part of a larger, better capitalized and more diversified company," says Lynn. "We are confident that a combination of GFI and BGC will produce increased productivity per broker, meaningful synergies and significant cost savings. We therefore continue to seek a negotiated merger with GFI that would provide superior value to your shareholders, and we are prepared to begin such negotiations immediately.

"However, given your lack of response to our offers, and our belief that the pending transaction deprives GFI shareholders of the opportunity to realize appropriate value, particularly given the significant discount agreed to with respect to the purchase of the brokerage and clearing business, we intend to make an offer directly to the GFI shareholders," Lynn continues.

A spokesperson for GFI declined to comment. The CME Group did not respond to a request for comment in time for publication.