Getco deal values Knight Capital at $1.3bn Getco has offered to buy struggling rival Knight Capital Group in a deal that values the company at $1.3bn and would consolidate two of the US's largest electronic market-makers. Chicago-based Getco has proposed to buy the shares in Knight that it does not already own for $3.50 a share - an 18 per cent premium to the closing price on Tuesday - in a complex cash-and-shares deal that would see Knight retain its listing on the New York Stock Exchange. Shares in Knight, which have risen steadily in recent days on speculation of a takeover approach, rose 12.8 per cent to $3.35 just before midday in New York. Companies such as Knight, Getco and Citadel have come to dominate market-making in the US, by using computer algorithms to make bids and offers in shares, futures, options and currencies at millisecond speeds. They are also the biggest market-maker for retail brokers in US equity shares trading. However, profitability has been hit by weak equities trading volumes this year, while the industry also faces higher costs in the face of incoming regulation. Knight's future has been unclear since August when it lost $461.1m on a software glitch that hit stocks on NYSE. Getco, backed by private equity firm General Atlantic, acquired a 15 per cent stake in Knight for $87.5m as part of a $400m bailout. The two-stage proposal is designed to give Knight's shareholders, including Blackstone Group, the asset management group, and General Atlantic a cash payment while also retaining the stock market listing. "By structuring the transaction with both cash and equity components, Knight shareholders are able to realise an immediate return on investment, as well as preserve the opportunity to participate in the future growth of the combined company," said Daniel Coleman, chief executive of Getco, in a letter to Knight on Tuesday. Getco proposed that Mr Coleman would become the head of the combined company and Knight's current chief executive, Tom Joyce, would remain as a non-executive chairman. Virtu and Knight declined to comment.