Cantor Fitzgerald agreed to sell its BGC Partners brokerage unit to ESpeed Inc., a publicly owned electronic trading house controlled by Cantor, in a deal valued at $1.3 billion.
The acquisition would enable Cantor, a New York bond-trading firm that lost hundreds of employees in the Sept. 11 terror attacks, to consolidate its interdealer broker businesses and end all revenue-sharing accords with ESpeed, which some ESpeed investors have criticized.
Cantor, however, would retain voting control over the combined ESpeed-BGC, which would be called BGC Partners and trade on Nasdaq.
The current BGC said it would withdraw a proposal it made this year for a $460-million initial public offering.
The transaction values ESpeed's Class A shares 6.1% higher than their closing price Tuesday of $9.75 a share.
That's lower than a purported $12-a-share takeover offer for E- Speed made in April by British interdealer broker Tullett Prebon, according to reports at the time.
BGC, which had first-quarter revenue of $249 million, is valued at about $1.2 billion, based on ESpeed's stock price Tuesday.
Addressing concerns during a conference call Wednesday that the deal undervalues ESpeed, Howard W. Lutnick -- who will be chairman and co-chief executive of the combined company -- said the figure represented both a premium on ESpeed's stock price and a discount from what BGC wanted to go public at.
He also said, "I cannot envision a third party effectively coming in to offer a deal to E- Speed that either Cantor or BGC would accept, because of the joint services agreement and revenue relationships between the two companies."
Lutnick is chairman and CEO of ESpeed, as well as president and CEO of Cantor.
ESpeed shares rose 4 cents to $9.23. Public investors would own 16% of the combined company.