BGC Partners to Buy Rival Brokerage GFI for $778 Million --Update

By Liz Hoffman 

BGC Partners Inc. has agreed to pay about $778 million for rival brokerage firm GFI Group Inc., ending a monthslong hostile takeover effort.

BGC will pay $6.10 a share for GFI and will gain control of GFI's board, which had been a sticking point between the two sides, people familiar with the matter said. The agreement would give BGC six out of eight board seats, satisfying a condition GFI's board had earlier rejected, they added.

The deal comes after GFI shareholders last month rejected a lower-priced sale to CME Group Inc.

BGC and GFI are interdealer brokers that arrange trades on behalf of Wall Street banks. The industry has been consolidating amid increased regulation of complex financial instruments such as derivatives.

"We are very happy to have reached an amicable conclusion to this long process," said BGC President Shaun Lynn in a news release. "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."

GFI is expected to operate as a unit of BGC, though the two will remain separately branded divisions.

BGC received about 48% of GFI shares in a tender offer, including its own 13.5% stake, the people said. In a tender offer, a buyer purchases stock directly from a target company's shareholders.

The tender offer had been set to expire Thursday but will be extended through Feb. 26, giving BGC more time to get additional shareholder support.

Chelsey Dulaney contributed to this article.

Write to Liz Hoffman at [e-mail]

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