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.


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.

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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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