Knight Trading Group Enters Into Definitive Agreement to Sell Derivative Markets Business to Citigroup for Approximately $225 Mi
09 Agosto 2004 - 8:16AM
PR Newswire (US)
Knight Trading Group Enters Into Definitive Agreement to Sell
Derivative Markets Business to Citigroup for Approximately $225
Million in Cash Knight Board increases share buyback program by
$140 million to $250 million JERSEY CITY, N.J., Aug. 9 /PRNewswire/
-- Knight Trading Group, Inc. (NASDAQ:NITE) today announced that it
has entered into a definitive agreement to sell Knight's Derivative
Markets business to Citigroup (NYSE:C) for approximately $225
million in cash. Under the terms of the agreement, Citigroup will
pay Knight approximately $225 million in cash at closing for
substantially all of the assets and the assumption of certain
liabilities of its Derivative Markets business operated by its
subsidiaries Knight Financial Products LLC (KFP) and Knight
Execution Partners LLC (KEP). The final purchase price is subject
to adjustment based on the adjusted book value of the Derivative
Markets business at the time the deal closes. Knight's equity
investment in the International Securities Exchange (ISE) is not
included in, and will not be affected by, the transaction announced
today, but Citigroup is purchasing Knight's membership rights on
the exchange. "Knight has made significant improvements to its
derivatives business since it was acquired in 2000," said Thomas M.
Joyce, Chief Executive Officer and President of Knight Trading
Group. "We adapted to the dynamic options market by increasing
efficiencies and introducing new products, transforming the
business into the attractive asset that it is today for Citigroup.
After a thorough review to explore the risks and rewards of both
our Derivative Markets business and the overall options industry,
as well as the role of a derivatives business in Knight's long-term
strategy, management concluded that Knight's strongest growth
opportunities remain in our Equity Markets and Asset Management
businesses, and that Derivative Markets has a better opportunity to
reach its full potential as part of a larger company. Citigroup,
with an expanding derivatives business, will provide a rewarding
work environment for Knight's Derivative Markets employees." The
transaction, which was unanimously approved by the Board of
Directors of Knight, is expected to close in the fourth quarter of
2004 and is subject to customary closing conditions, including
antitrust and regulatory approvals. Raymond James & Associates,
Inc. is acting as financial advisor and Skadden, Arps, Slate,
Meagher & Flom LLP is acting as legal advisor to Knight Trading
Group. "The proceeds from the transaction will allow Knight to
drive enhanced returns for shareholders by creating a ready pool of
cash for a variety of corporate purposes, including share
repurchases, reinvestments in our core businesses and
acquisitions," Mr. Joyce said. Stock Repurchase Program At a
meeting held on August 8, 2004, the Board of Directors of Knight
authorized an increase in the size of the company's share
repurchase program to $250 million from $110 million. During the
second quarter of 2004, the company repurchased 824,900 shares
under the program. To date, the company has repurchased 15.6
million shares for $90.4 million under the program. The company may
repurchase shares on the open market or through
privately-negotiated transactions, depending on prevailing market
conditions, alternative uses of capital and other factors. The
company cautions that there are no assurances that any further
repurchases will actually occur. The company had $773.2 million in
stockholders' equity as of June 30, 2004, equivalent to a book
value of $6.67 per share. As of June 30, 2004, the company had
$223.6 million in cash and cash equivalents and a $207.9 million
investment in funds managed by its Deephaven subsidiary. Knight
Trading Group had approximately 116.0 million shares of common
stock outstanding as of June 30, 2004. Conference Call Knight will
conduct a conference call for analysts, investors and the media at
9:00 a.m. Eastern Daylight Time (EDT) today, August 9, 2004. Chief
Executive Officer and President Thomas M. Joyce will make a brief
statement and answer questions relating to the sale of the
company's Derivative Markets business. Domestic callers who wish to
access Knight's conference call can do so by dialing (800)
406-5345. International callers may dial (913) 981-5571. The
Confirmation Code to access this conference call is 350389. About
Knight's Derivative Markets Business Knight's Derivative Markets
Business, including Knight Financial Products LLC (KFP) and Knight
Execution Partners LLC (KEP), is a leading U.S. options market
maker and specialist, providing comprehensive trade execution
services to institutions and broker-dealers across a significant
number of U.S. options products. KFP operates as a market maker and
specialist in listed options on individual equities, equity indices
and fixed income and commodity futures instruments in the U.S. KEP
manages a professional option and equity execution services
business. As of July 1, 2004, Knight had 246 Derivative Markets
employees in Chicago; Jersey City, New Jersey; Minnetonka,
Minnesota; New York; Philadelphia; and San Francisco. By contract
volume, Knight is among the largest U.S. equity options market
makers. It has specialist rights in approximately 500 option
classes as of June 2004, coverage of nearly three-fourths of all
equity option order flow and the ability to route order flow to all
U.S. options exchanges. Knight's significant options contract
liquidity, risk management capabilities and trading efficiencies
from proprietary technology provide clients with extremely
competitive pricing and order execution quality. KFP and KEP are
broker-dealers registered with the Securities and Exchange
Commission and are members of the Chicago Board Options Exchange,
American Stock Exchange, Philadelphia Stock Exchange, Pacific Stock
Exchange and the International Securities Exchange and operate on
the Boston Options Exchange. KFP also is a member of the Chicago
Board of Trade, the Chicago Mercantile Exchange, the New York
Mercantile Exchange and the Philadelphia Board of Trade. KEP also
is a member of NASD. About Knight Trading Group Knight
(NASDAQ:NITE) is focused on meeting the needs of institutional and
broker-dealer clients by providing comprehensive trade execution
services in equities and derivatives. A leading execution
specialist, Knight offers capital commitment and access to a deep
pool of liquidity across the depth and breadth of the equity
market. Knight also operates an asset management business for
institutions and high net worth individuals. To be a valued
partner, Knight strives to provide superior client service and will
continue to tailor its offering to meet the needs of its clients.
More information about Knight can be obtained at
http://www.knighttradinggroup.com/. About Citigroup Citigroup's
Global Corporate & Investment Banking Group is a leading force
in the world's capital markets and consists of three business
lines: Global Banking, Capital Markets, and Transaction Services.
Citigroup provides more industry-leading solutions to more clients
in more countries than any of its competitors. No other company
serving the capital markets offers Citigroup's geographic reach,
local presence, product scope, expertise, and high standards.
Citigroup (NYSE:C), the preeminent global financial services
company has some 200 million customer accounts and does business in
more than 100 countries, providing consumers, corporations,
governments and institutions with a broad range of financial
products and services, including consumer banking and credit,
corporate and investment banking, insurance, securities brokerage,
and asset management. Major brand names under Citigroup's trademark
red umbrella include Citibank, CitiFinancial, Primerica, Smith
Barney, Banamex, and Travelers Life and Annuity. Additional
information may be found at http://www.citigroup.com/ Certain
statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on current
expectations, estimates and projections about Knight's industry,
management's beliefs and certain assumptions made by management.
Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict.
Since such statements involve risks and uncertainties, the actual
results and performance of Knight may turn out to be materially
different from the results expressed or implied by such
forward-looking statements. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. Unless otherwise required by law, Knight also disclaims
any obligation to update its view of any such risks or
uncertainties or to announce publicly the result of any revisions
to the forward-looking statements made herein; however, readers
should carefully review reports or documents Knight files from time
to time with the Securities and Exchange Commission. DATASOURCE:
Knight Trading Group, Inc. CONTACT: Margaret Wyrwas, Senior
Managing Director, Corporate Communications & Investor
Relations, +1-201-557-6954, ; or Kara Fitzsimmons, Vice President,
Corporate Communications, +1-201-356-1523, ; or Greta Morley,
Assistant Vice President, Marketing Communications & Public
Relations, +1-201-557-6948, , all of Knight Trading Group; or
Duncan King, First Vice President, Corporate Communications of
Citigroup, +1-212-816-4723 or Web site:
http://www.knighttradinggroup.com/ http://www.citigroup.com/
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