10.04.2018
By Markets Media

ITG Stock Surges on Virtu Buyout Report

ITG shares surged more than 25%, on a down day in the market, on a report that electronic market maker Virtu Financial is pursuing a takeover of the independent brokerage.

Virtu is working with a financial adviser to pursue ITG, Bloomberg reported, citing unidentified people familiar with the matter. Virtu and ITG have been holding talks about a deal recently, but there’s no assurance a transaction will happen, according to Bloomberg.

ITG’s stock jump, from $22 to $27.60, indicates the market is fairly confident that a buyout will be finalized, as an M&A rumor with less credibility might push a stock up in the order of 5% to 10%.

Markets Media staff attending the Security Traders Association conference in Washington, D.C. solicited some reactions to the Bloomberg report.

One STA attendee said that the Virtu-ITG combination seems like a “done deal”. This industry person speculated that a merger could result in 50%-60% headcount reductions at ITG.

Another STA attendee said he wasn’t surprised that ITG would be taken over, as while the franchise is a valuable asset, the company couldn’t quite get its act together over the past couple years.

ITG’s stock performance supports that opinion, as the share price fluctuated mostly between $20 and $22 through 2016 and the first nine months of 2017, while financial stocks overall appreciated by about 15% over that time.

Virtu investors apparently have no problem with an ITG buyout, as VIRT shares increased 10% today. Virtu’s market capitalization is about $4.3 billion, compared with $910 million for ITG.

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