Knight Capital Group to Acquire Hotspot FX Electronic Foreign Exchange Marketplace
January 24 2006 - 5:00AM
PR Newswire (US)
All-Cash Acquisition Marks Knight's Expansion Into a New Asset
Class JERSEY CITY, N.J., and WATCHUNG, N.J., Jan. 24
/PRNewswire-FirstCall/ -- Knight Capital Group, Inc. (NASDAQ:NITE)
today announced that it has agreed to acquire Hotspot FX, Inc., a
privately held firm that provides institutions and dealers with
spot foreign exchange trade execution through an advanced, fully
electronic platform. "The addition of Hotspot advances Knight's
ambition to become a virtual exchange for high-quality trade
execution across multiple asset classes," said Thomas M. Joyce,
Chairman and Chief Executive Officer of Knight Capital Group. "In
an increasingly fragmented market, clients want a centralized
source for deep liquidity in the widest variety of securities. We
also believe demand for electronic foreign exchange trading will
continue to rise dramatically, especially as more institutions
embrace FX as a source of alpha, and not simply a currency hedge.
Hotspot's ECN-based platform is the right model to benefit from
this trend. In Hotspot, we are excited to have found a leader in
the electronic FX market that shares our values and strengths in
the cash equities market -- trade execution quality, natural
liquidity, sophisticated technology, a history of innovation, and,
most importantly, commitment to the client. Additionally, the
fee-based model fits well with our growth and revenue
diversification strategy." Hotspot FX, based in Watchung, N.J.,
offers institutions and dealers access to electronic spot foreign
exchange trading through Hotspot FXi. Hotspot FXi is an e-financial
marketplace where buyers and sellers worldwide can trade directly
and anonymously with each other, obtain price improvement for their
trades and lower their overall trading costs. Hotspot's clients,
which include asset managers, hedge funds, commodity trading
advisors, corporate treasurers and regional banks, benefit from
live streaming prices from participants and a network of top-tier
prime brokers providing credit intermediation and post-trade
support. Hotspot's platform has experienced remarkable monthly
growth since its inception in 2000, now supports 24 currency pairs
and executes 5,000 to 10,000 FX spot trades per day. "Knight is a
fantastic partner for Hotspot FX," said John H. Eley, President and
Chief Executive Officer, Hotspot FX. "Both firms share a culture of
client service and both are deeply committed to developing and
driving market innovation through creative technologies and market
structures. Knight has strong client relationships and deep
technology resources that will help take the Hotspot FX marketplace
to the next level." Knight agreed to acquire Hotspot FX in an
all-cash deal for approximately $77.5 million. The close of the
transaction is subject to receipt of appropriate regulatory
approvals and is expected to be completed within 90 days. Upon the
close of the acquisition, Hotspot FX will operate as a separate
subsidiary of Knight Capital Group. The acquisition is expected to
be accretive in 2007 and is not expected to affect Knight's annual
GAAP earnings forecast for 2006. The acquisition is expected to be
cash flow positive immediately following the closing of the
transaction. The advisers to Knight on the transaction are Sandler
O'Neill & Partners and Skadden, Arps, Slate, Meagher & Flom
LLP. The advisers to Hotspot FX are Evercore Partners, Morgan
Stanley and Lowenstein Sandler PC. Conference Call and Webcast
Knight will conduct a conference call for analysts, investors and
the media at 9 a.m. Eastern Standard Time (EST) today, January 24,
2006. Chairman and Chief Executive Officer Thomas M. Joyce will
make a statement and answer questions relating to the acquisition
of Hotspot FX. Domestic callers who wish to access the presentation
via conference call may do so by dialing 800.289.0572.
International callers may dial 913.981.5543. The confirmation code
to access this conference call is 6740727. Please join the call at
least fifteen minutes before the presentation is scheduled to begin
and be prepared to provide your name and company affiliation. A
live audiocast of the presentation also will be available at the
company's website, http://www.knight.com/. Please note that
participants who would like to ask questions must dial in via
conference call; participants will not be able to join in the
question and answer session via the website. Presentation materials
will be available for download immediately prior to the event at
http://www.knight.com/. About Knight Capital Group Knight is a
leading provider of comprehensive trade execution and asset
management services. Our Equity Markets business offers
institutions and broker-dealers high quality trade execution and
capital commitment across the depth and breadth of the equity
market. Our Asset Management business, Deephaven Capital
Management, is a multi-strategy investment manager focused on
delivering risk-adjusted returns with low volatility for
institutions and high net worth individuals. Knight strives to be a
valued partner by providing superior service and continually
enhancing its offering to meet client needs. More information about
Knight can be obtained at http://www.knight.com/. About Hotspot FX
Hotspot FX, Inc. operates a leading spot FX marketplace for
institutions, in addition to a retail platform. Both marketplaces
provide anonymous, instantaneous, direct access trading on live,
executable, streaming prices supplied by leading foreign exchange
banks and financial institutions. Hotspot FXi placed first in the
authoritative 2005 Euromoney Foreign Exchange Survey in the key
categories of Speed of Execution and Straight-through-Processing
and separately was named Best at Streaming Prices in Euromoney
Technology Awards also in 2005. Hotspot FX provides connectivity to
trade and order management systems, market data vendors and other
platforms via LiveLinksm proprietary API, which supports the firm's
FIX gateway as well as other connectivity protocols. Hotspot FX has
66 employees and is headquartered in Watchung, N.J., with offices
in Chicago, Boston, London, Beijing and Singapore. For additional
information, visit the Hotspot FX web site at
http://www.hotspotfx.com/ or e-mail . 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 the Company'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 the Company 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, the Company 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 the Company files from
time to time with the Securities and Exchange Commission including,
without limitation, the risks and uncertainties detailed under the
headings "Certain Factors Affecting Results of Operations" and
"Risks Affecting our Business" in the Company's Annual Report on
Form 10-K. First Call Analyst: FCMN Contact:
KFitzsimmons@knighttrading.com DATASOURCE: Knight Capital 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, Vice President, Marketing
Communications & Public Relations, +1-201-557-6948, ; or Molly
McDowell, Analyst, Corporate Communications & Investor
Relations, +1-201-356-1723, , all of Knight Capital Group, Inc. Web
site: http://www.knight.com/ http://www.hotspotfx.com/
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