As reported in a previous blog post, New Jersey’s Knight Capital Group has struggled financially since a computer error cost the company $460 million. In December, it was rumored that Knight was looking to be acquired by a larger more financially stable company following a short term deal with other investment companies that helped to keep the firm afloat.
Since that blog post, Knight has reached a deal with one-time competitor Getco Holdings Co. LLC. Under the terms of the deal, the companies closed a $1.4 billion merger on July 1. The companies merged together to create KCG Holdings Inc. KCG will be headquartered in New Jersey. The deal was completed after both regulators and shareholders approved the merger in late June. KCG is estimated to be one of the most high-volume trading companies in the world following this merger.
Many may think that since the merger has closed that the hard work for the companies is over. However, much of the restructuring has only just begun for the new KCG. As of March, the companies had a combined 1,600 employees — many of whom live and work in New Jersey — that now need to be incorporated into the new business. In February, Knight announced that layoffs were likely as part of the restructuring. It is unclear whether additional layoffs will occur now that the merger is complete.
New Jersey businesses have to deal with many issues as they contemplate a merger or acquisition. Corporate strategy, business goals and employee issues all have to be considered at every stage of the process. If these steps are properly undertaken then businesses can easily and successfully move forward from a private or public merger.
Source: NJBIZ, “Knight completes $1.4B merger with Getco; combined firm will be based in N.J.,” Jared Kaltwasser, July 3, 2013
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