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Getco, Virtu make bids for Knight

Two firms have offered to buy the Knight Capital Group, a financial services firm that suffered a $440 million trading loss in August because of a technology error.

One bid, for $3.50 a share in cash and stock, came on Wednesday from the high-frequency trading firm Getco, which three months ago helped rescue Knight from the brink of bankruptcy and acquired a large stake in the firm.

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The other bid, from the trading firm Virtu Capital, was privately submitted to Knight’s board on Tuesday. It offered to buy the entire company for $3 a share in cash, according to people involved in the negotiations. These people said Virtu had secured financing from a number of sources, including the private equity firm Silver Lake Partners.

Both companies are said to be keenly interested in Knight’s market-making trading operations, though they may sell less desirable parts of the company.

Getco, which already owns about 24 percent of Knight, proposed buying more than half of the company.

The trading loss that Knight Capital experienced in early August stemmed from a technology error that generated erroneous orders to buy shares of major stocks. Before the trading blunder, Knight’s shares traded above $10.

Getco was among the companies that offered a $400 million lifeline to Knight after the error.

Shares in Knight Capital rose 15 percent on Wednesday, to $3.42.

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