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.

Related articles

  1. The Bionic Trading Desk

    Korea-based firm has underserved hedge funds in its sights.

  2. Don't Let the Snow Keep You Indoors

    Regional broker-dealers are today's Bailey Building and Loan.

  3. Online brokerage takes on traditional business news.

  4. The transaction is expected to close in the first quarter of 2019. 

  5. CEO Steve Ehrlich says institutions want to get involved but don't want to build out in-house solution.