After a month of negotiations, KCG Holdings has agreed to be acquired by Virtu Financial for $20 a share, or $1.4 billion. Virtu’s initial offer was $18 a share, or $1.2 billion.  [See Financialish, 3/15/17] The combined company will be led by Virtu Financial CEO Doug Cifu.

While the deal comes at a time when high-frequency trading, or HFT, firms are under significant pressure due to low volatility in the markets, Virtu CEO Doug Cifu has this to say:

"KCG fits perfectly with Virtu's strategic priorities to apply our market making and technological expertise to customer wholesale order flow and expand Virtu's growing agency execution business."

KCG Holdings was formed in December 2012 from the merger of New Jersey-based Knight Capital Group — a pioneer of electronic market making — and Chicago-based Getco.

Virtu Financial makes markets in 36 countries and 12,000 financial instruments, continuously quoting buy and sell prices for others to trade against, profiting off the bid-offer spread, using HFT strategies.

DEALMAKERS.    According to CNBC, the deal will be financed through stock sale worth $750 million to private equity firm North Island and Temasek (state-owned Singapore investment company) and borrowings of $1.65 billion from JPMorgan Securities. Bob Greifeld and Glenn Hutchins, principals at North Island, will join the board after the deal. JPMorgan Securities advised Virtu on the deal, while Goldman Sachs advised KCG.