Update: GFI Board Rejects BGC Offer

The latest salvo in the long-running battle between GFI ─ which initially announced that it would be acquired by the Chicago Mercantile Exchange (CME) Group in July ─ and BGC means that the offer is open to shareholders without the support of the company's management. BGC had previously entered into negotiations over its offer, which values the company at $5.25 per share, but turned it hostile after it accused GFI's board of not negotiating in good faith. GFI, for its part, describes BGC's advances as "unsolicited", and says that the board still supports the original deal with CME Group.

Recommendations from the committee for rejecting the offer centered on the likelihood of the deal being consummated, which it said was much higher with the original CME deal than the offer presented by BGC, which currently owns 13.5 percent of the firm.

"The board carefully considered the unanimous determination and recommendation of the special committee of the board to reject the offer after consultation with its independent financial advisor and outside legal counsel," says GFI, in a statement posted to its investor relations website. "The special committee and the board determined that the offer is highly conditional and is not in the best interests of GFI or its stockholders. Accordingly, the board recommends that GFI stockholders reject the offer and not tender their shares into the offer."

GFI has published the recommendations of the special committee and its reasoning in a Schedule 14D-9 filing with the US Securities and Exchange Commission. There was no immediate public comment from either BGC Partners or the CME Group. However, in an interview with Reuters published yesterday, CME chairman Terry Duffy expressed optimism that Trayport and Fenics, the technology products owned by GFI at the heart of the tussle, would be available no matter the outcome of the spat.

Update (November 6): BGC Partners has released a statement saying that its offer for GFI still stands up to the closing date of November 19, by which shareholders must respond. The firm reinforced its belief that the higher price value placed on the CME offer of $4.55 per share constitutes a superior offer, but said that it would amend aspects of its proposal to counter the objections put forward by GFI's special committee.

"We are confident that GFI's outside shareholders will view BGC's fully financed, $5.25 per share all-cash tender offer as superior to the $4.55 per share all-stock transaction with CME," says Howard Lutnick, chairman and CEO of BGC. "We remain committed to completing our tender, which provides a higher all-cash price, and which has closing conditions offering BGC protections substantially similar to the protections offered to CME by GFI."