Citigroup to buy electronic trader
NEW YORK -- To better adapt to the electronic trading trend, Citigroup Inc. yesterday said it is buying Automated Trading Desk for about $680 million in cash and stock.
The Citi Markets & Banking unit's acquisition of ATD, an electronic market making and proprietary trading company, is expected to close in the third quarter, subject to regulatory approval, Citi said. The purchase price includes $102.6 million in cash and about 11.17 million shares of Citi stock.
The goal is to attract as many orders as possible -- and automatic trading is the fastest and easiest way to do that, Citigroup said.
"The combination of Citi's Global Equities business and ATD will create a leading US stock trading platform," said James Forese, Citigroup's head of global equities.
ATD has about 120 customers and typically trades about 200 million shares a day, of which more than 99 percent are done automatically. According to the 19-year-old company's website, in 2006, ATD accounted for about 6 percent of all New York Stock Exchange volume and 6 percent of all Nasdaq volume.
Citigroup's buy of ATD follows other acquisitions aimed at strengthening its trading platform. In 2004, Citigroup bought Lava Trading, which supplied direct access electronic trading software and services. Last year, it bought the capital markets business of TD Waterhouse. And in January, it acquired OnTrade Inc., an electronic communications network that was operated by NexTrade Holdings Inc.
"What Citigroup is recognizing is that it's behind the curve technologically in getting business in the capital markets," said Punk, Ziegel & Co. analyst Richard Bove, noting that Goldman Sachs and Morgan Stanley are way ahead in the electronic trading game.
"Goldman spends tens of millions of dollars on this stuff. They have more people working in their technology area than people on the trading desk," Bove said. "The nature of the markets has changed dramatically."
Bove predicted Citigroup will make more acquisitions to improve its online trading expertise.
ATD will maintain its headquarters in Mount Pleasant, S.C., and Steven Swanson will remain as its chief executive, Citigroup said.
Citigroup shares rose 35 cents to $51.64 on the New York Stock Exchange.
