By Liz Hoffman
GFI Group Inc. shareholders rejected a buyout proposal from CME
Group Inc. and GFI management, according to people familiar with
the matter, opening the door for rival BGC Partners Inc. to press
its own hostile bid for the company.
CME's $5.85-a-share bid failed to get enough votes at a
shareholder meeting Friday in New York, the people said. CME had
planned to keep GFI's software businesses and sell back the
brokerage, a middleman to Wall Street banks, to a group of GFI
executives, including Chairman Mickey Gooch.
BGC, run by Cantor Fitzgerald Chief Executive Howard Lutnick,
has made a competing, $6.10-a-share tender offer for all of GFI, in
which it owns a 13.5% stake. That offer values the firm at about
$778 million and expires Tuesday.
Mr. Lutnick urged shareholders "to tender their shares into our
clearly superior offer, and we are prepared to move quickly to
complete this transaction."
Interdealer brokers like GFI and BGC connect banks looking to
trade financial instruments such as derivatives. The business has
been under pressure in recent years as banks have curbed trading
and regulators have sought more oversight over the derivatives
market.
On Friday, GFI Group's shares fell seven cents, or 1.2%, to
$5.61. BGC Partners fell 36 cents, or 4.3%, to $7.83, and CME's
stock fell 92 cents, or 1.1%, to $85.30.
Bloomberg earlier Friday reported on the vote.
BGC and CME had been locked in a bidding war over GFI since last
summer, a fight that had exacerbated a rivalry between the two
firms. Shareholder advisory firms Institutional Shareholder
Services Inc. and Glass, Lewis & Co. recommended against the
bid from GFI management and CME, citing BGC's higher bid and
potential conflicts of interest among GFI's management.
While BGC's bid is higher, it faces its own obstacles. BGC has
conditioned its bid on getting two-thirds of GFI's director seats,
which GFI's existing board has resisted. BGC can waive that
requirement, but then risks finding itself with a hefty stake but
little influence.
Mr. Gooch and other GFI insiders own about 38% of its stock.
They signed a voting agreement last summer with CME that prevents
them from supporting any other bidder for a year, meaning they
couldn't sell to BGC for the next several months even if they
wanted to.
The failed vote could also draw out other suitors. The official
tally wasn't available. The deal faced long odds given BGC's 13.5%
stake and a GFI requirement that any merger be approved by a
two-thirds majority.
Write to Liz Hoffman at liz.hoffman@wsj.com
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