Shareholders of the GFI Group, a New York brokerage firm, have rejected a planned acquisition by the CME Group, clearing a path for a hostile bid by a rival firm.
GFI said on Friday that it was abandoning the merger plan after investors voted it down at a special meeting. The CME proposal, which was revised many times, would have valued GFI at $5.85 a share in cash and stock. Upon its rejection, GFI said its board would “explore strategic alternatives” for enhancing shareholder value, including a possible merger.
The hostile bidder, BGC Partners, which is run by Howard W. Lutnick, seized the opportunity to reiterate its own offer to buy GFI for $6.10 a share in cash, or about $778 million. In a statement, Mr. Lutnick urged GFI shareholders “to tender their shares into our clearly superior offer, and we are prepared to move quickly to complete this transaction.”
The development punctuated a monthslong fight that started in the summer, when CME, which operates the the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, announced an agreement to buy GFI in a two-part transaction. CME planned to buy GFI and then sell its wholesale brokerage and clearing businesses to a group led by GFI’s management.
But BGC arrived on the scene in September, saying it owned about 13.5 percent of GFI and wanted to buy the rest. After failing to strike a deal, BGC went hostile with its offer in October. The two bidders continued to spar over the ensuing months.
Michael Gooch, the executive chairman of GFI, said in a statement on Friday: “While we are disappointed that the CME merger was not approved by our shareholders, we appreciate their view and will work tirelessly to find a strategic alternative that offers the company’s shareholders the chance to maximize the value of their investment.”
Mr. Lutnick, who also runs the investment bank Cantor Fitzgerald, said on Friday that the BGC offer was now the “only viable option” for GFI shareholders. His offer will expire on Tuesday, unless it is extended.
BGC is taking advice from Cantor Fitzgerald and the law firm Wachtell, Lipton, Rosen & Katz.