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Will CME Group Lose out to BGC Partners' Bid Hike for GFI? - Analyst Blog

CME Group Inc.’s (CME) bid for GFI Group (GFIG) faces tough competition after BGC Partners (BGCP) raised its offer to $5.60 per share, about 2.8% higher than the previous value. Currently, GFI Group has 127.5 million shares outstanding. The new bid therefore amounts to $714 million.

CME Group had inked a deal with the fifth-largest global inter-dealer broker – GFI Group Inc. – to acquire the latter’s European energy (Trayport) and global foreign exchange software (“FENICS”) businesses on Jul 30, 2014 for $4.55 per share.

Last month, CME Group raised the bid by 15% over the previous value to $5.25 per share or $669.4 million which was approved by GFI Group’s board. The voting date for the shareholders was scheduled on Jan 27, 2015.

Meanwhile, on Jan 9, BGC Partners requested the shareholders of GFI Group to reject its previous offer and made a new deal offer of $5.60 per share. Moreover, the new bid offers an additional 7% premium over CME Group’s bid and is also 80% higher than GFI Group’s share price before CME Group's original offer was announced.

It cannot be ascertained whether CME Group and GFI Group’s previously announced deal would ultimately materialize in the light of the recently upped offer announced by BGC Partners.

CME Group will be severely impacted if it loses the opportunity of bagging the deal. The stock will not only lose the Trayport platform and the FENICS business but will also miss out on the chance of enhancing its London and European operations where it faces strong competition from players like Intercontinental Exchange Inc. (ICE). Furthermore, the missed opportunity will weigh on the long-term growth prospects of CME Group.

However, GFI Group has not commented on the latest bid hike from BGC Partners as yet.

Currently, CME Group holds a Zacks Rank #2 (Buy).      


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INTERCONTNTLEXC (ICE): Free Stock Analysis Report
 
CME GROUP INC (CME): Free Stock Analysis Report
 
BGC PARTNRS INC (BGCP): Free Stock Analysis Report
 
GFI GROUP INC (GFIG): Free Stock Analysis Report
 
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