BGC climbed 49 percent to $5.72 at 4 p.m. in New York, the biggest gain since it went public in December 1999. The company said yesterday in a statement it will sell the electronic U.S. Treasury trading platform to Nasdaq OMX Group Inc. (NDAQ) for $750 million in cash, or $1.2 billion if sales goals are met. Nasdaq OMX Group fell 13 percent to $27.91, its largest drop in more than four years.
Howard Lutnick, 51, chief executive officer of New York- based BGC and Cantor Fitzgerald, has been diversifying into commercial real estate as bond trading slows. The brokerage may end up receiving as much as yesterday’s market value of the entire company for the unit, which generated about 6 percent of BGC’s revenue last year, Lutnick said in the statement.
“For BGC, this is a huge deal because their all-in price was higher than the market capitalization was,” Jillian Miller, an Atlanta-based exchange analyst at BMO Capital Markets, said in a telephone interview. “BGC saw this as an opportunity to sell off this piece that isn’t affected by the regulatory environment and realize some value for it.”
Nasdaq OMX Group as a whole must generate $25 million of revenue a year for BGC to receive the additional payments, Lutnick said last night in a conference call to discuss the sale. The firm’s revenue last year was $3.12 billion, according to data compiled by Bloomberg.
BGC’s stock declined 59 percent over the past two years through yesterday. It will keep its voice and hybrid brokerage and electronic business for off-the-run Treasuries and other fixed-income products, the company said. On the conference call, Lutnick declined to specify how he’ll use the cash, saying “nothing is off the table.”
“Today is the day that you take a look at how much we’ve invested and say, ‘Wow, these guys actually have tremendous assets,’” Lutnick said.
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