Virtu Financial, Inc. (VIRT - Free Report) has agreed to divest MATCHNow to Cboe Global Markets. Subject to certain closing conditions, the deal is expected to be completed in the third quarter of 2020.
Rationale Behind the Deal
MATCHNow is an alternative trading system, providing dark pool ATS to the Canadian equities market. It is operated by Virtu Financial’s wholly-owned unit TricAct Canada Marketplace LP, competing with different national and regional securities exchanges, ATSs, Electronic Communication Networks, MTFs and systematic internalizers for trade-execution services.
Equipped with an efficient team and commitment to offer top-notch services to Canadian traders, MATCHNow has been catering to its core client base with excellent services.
The deal will allow MATCHNow to deliver the services expansively to numerous market participants as it will gain leverage from the size and scale of a global exchange operator, Cboe Global. The combined synergies of both companies will lead to growth and innovation in the equities market.
The net-after tax fund generated from this sell-off will be used by Virtu Financial to repay a portion of its outstanding term loan.
On Tuesday, this leading provider of financial services and products announced that it made a prepayment of around $188 million in principal toward its senior secured first lien term loan, which in turn, will help it save $7.3 million in annual interest expense.
Virtu Financial also has plans to use its free cash flow to decrease the term debt.
Shares of this Zacks Rank #1 (Buy) company have surged 38.1% year to date against its industry’s decline of 23.2%. The price performance looks impressive when compared to other companies’ stock movements in the same space, such as PRA Group, Inc. (PRAA - Free Report) , Global Payments Inc. (GPN - Free Report) and MoneyGram International, Inc. (MGI - Free Report) , which have lost 11%, 10.7% and 23.8%, respectively, in the same time frame. While PRA Group and Global Payments carry a Zacks Rank #3 (Hold), MoneyGram has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
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