UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 9, 2016
INVESTMENT TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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001-32722 |
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95-2848406 |
(State or Other Jurisdiction |
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(Commission |
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(IRS Employer |
One Liberty Plaza, 165 Broadway |
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10006 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrants telephone number, including area code: (212) 588-4000
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.05. Costs Associated with Exit or Disposal Activities.
On May 9, 2016, Investment Technology Group, Inc. (the Company) entered into a Membership Interests Purchase Agreement to sell ITG Investment Research, LLC (Investment Research), a wholly owned subsidiary of the Company, to a wholly owned subsidiary of Leucadia National Corporation (Leucadia) for $12 million in cash (the Transaction). The Transaction is expected to close at the end of May 2016. The Company announced that as a result of the Transaction, the Company will reduce the headcount within its U.S. high-touch sales trading operation.
The Company expects to incur a restructuring charge related to the headcount reduction of approximately $1.6 million for employee separation costs. Future cash payments related to the restructuring are expected to be approximately $0.7 million. Substantially all of these payments are expected to be made in the second quarter of 2016 and the remaining payments are expected to be made before the end of 2016.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the Transaction, Michael V. Marrale will cease to serve in his role as Managing Director and Head of U.S. Research, Sales and Trading of the Company and will no longer be an employee of the Company or any of its subsidiaries effective as of the closing of the Transaction. In connection with his separation from the Company, Mr. Marrale entered into an Agreement dated May 9, 2016 (the Agreement), under which he will receive a lump sum cash payment equal to $1,915,362 to compensate him for the unvested restricted stock units of the Company that he will forfeit and the 2016 bonus that he will not be entitled to receive, in each case, upon his separation from employment. This payment is subject to the condition that Mr. Marrale (1) remains an employee in good standing (as defined in the Agreement) of the Company or one of its subsidiaries through the effective time of the closing on the closing date of the Transaction (the Closing), (2) commences employment with Leucadia or any of its affiliates on the Closing, and (3) agrees to repay the payment to Investment Research if he is terminated for cause (as defined in the Agreement) or violates certain restrictive covenants during the two-year period immediately following the Closing under the following schedule: 100% of the amount, when the termination or violation occurs during the one-year period immediately following the Closing, and 50% of the amount, when the termination or violation occurs during the next following one-year period. For the two-year period following the Closing, Mr. Marrale has agreed not to (i) render services for any organization or engage in any business which is or becomes competitive with the business of Investment Research, its subsidiaries or Jefferies LLC (the Leucadia Entities), (ii) induce any customer of any Leucadia Entity to curtail, limit or cancel its business with any Leucadia Entity or solicit a customer of any Leucadia Entity to transact business with a person other than a Leucadia Entity that is in direct competition with the Leucadia Entities and (iii) induce or attempt to influence any employee or contractor of any Leucadia Entity to terminate employment or services with any Leucadia Entity or solicit any employee or contractor of any Leucadia Entity to provide services to a person other than a Leucadia Entity.
Item 8.01. Other Events.
On May 10, 2016, the Company issued a press release announcing its entry into a purchase agreement for the Transaction. A copy of this press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release issued by Investment Technology Group, Inc. on May 10, 2016.
FORWARD-LOOKING STATEMENTS
This current report on Form 8-K contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, both known and unknown, that are difficult to predict and important factors could cause actual results to differ materially from those anticipated, including (1) the Closing of the Transaction may not be completed within the expected timeframe, (2) the estimates of restructuring expenses involve significant judgment by management and actual results could vary significantly from the estimates, and (3) the other factors identified in the Companys annual report on Form 10-K for the year ended December 31, 2015 under Item 1A, Risk Factors, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, and Item 7A, Quantitative and Qualitative Disclosures about Market Risk, which you are encouraged to read. The Company disclaims any duty to update any of these forward-looking statements after the filing of this report to conform its prior statements to actual results or revised expectations and the Company does not intend to do so. These forward-looking statements should not be relied upon as representing the Companys views as of any date subsequent to the filing of this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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INVESTMENT TECHNOLOGY GROUP, INC. | |
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By: |
/s/ Steven R. Vigliotti |
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Steven R. Vigliotti |
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Chief Financial Officer and Duly Authorized Signatory of Registrant |
Dated: May 10, 2016
Exhibit 99.1
ITG Agrees to Sell ITG Investment Research
NEW YORK, May 10, 2016 ITG (NYSE: ITG), a leading independent broker and financial technology provider, today announced that it has signed a definitive agreement to sell ITG Investment Research to Leucadia National Corporation (NYSE: LUK), a diversified holding company. Subject to customary conditions, the transaction is expected to close at the end of May 2016. Upon close, ITG Investment Research will operate as M Science.
Under the terms of the agreement, Leucadia will acquire ITG Investment Research for $12 million in cash. ITG expects to generate a net increase in cash of more than $5 million. ITG does not expect to book a material gain or loss from this transaction after related costs and taxes and the write-down of the remaining intangibles associated with ITG Investment Research.
ITG Investment Research currently provides data driven research in the Consumer, Telecom, Media, Technology and Macro sectors, covering more than 200 companies.
ITG will continue to deliver energy research to institutional investors under its prior agreement following the sale of RS Energy Group to an affiliate of Warburg Pincus in December 2015.
ITG also announced today that it plans to take a restructuring charge of approximately $1.6 million to reduce the headcount within its U.S. high-touch sales trading operation as a result of this sale. ITG expects to realize cost savings of approximately $3 million annually as a result of this action.
Commenting on the sale, ITG Chief Executive Officer and President, Frank Troise, said, The sale of our remaining research operations and the associated cost reduction measures we took today provide clarity to our clients, our shareholders and our employees that our strategic focus and resource allocation will be applied to our core capabilities in execution, liquidity, platforms and analytics. We thank our colleagues for their dedication and contributions to our firm.
ITG will provide more details about these developments, including forecasted impacts on revenues and expenses, after the transaction closes.
About ITG
ITG is an independent broker and financial technology firm that improves the efficiency and execution quality of institutional trading. ITG helps clients understand market trends, mitigate risk and navigate increasingly complex markets. A leader in electronic trading since launching the POSIT® crossing network in 1987, ITG takes a consultative approach in delivering the highest quality execution and liquidity solutions along with workflow tools and analytics. The firm is headquartered in New York with offices in North America, Europe, and the Asia Pacific region. For more information, please visit www.itg.com.
Investor/Media Contact:
ITG
J.T. Farley
+1 212 444 6259
corpcomm@itg.com
In addition to historical information, this press release may contain forward-looking statements that reflect managements expectations for the future. A variety of important factors could cause results to differ materially from such statements. Certain of these factors are noted throughout ITGs 2015 Annual Report on Form 10-K, and its Form 10-Qs (as amended, if applicable) and include, but are not limited to, general economic, business, credit and financial market conditions, both internationally and domestically, financial market volatility, fluctuations in market trading volumes, effects of inflation, adverse changes or volatility in interest rates, fluctuations in foreign exchange rates, evolving industry regulations and increased regulatory scrutiny, customers reactions to the settlement in August 2015 with the Securities and Exchange Commission, the outcome of contingencies such as legal proceedings or governmental or regulatory investigations, the volatility of our stock price, changes in tax policy or accounting rules, the actions of both current and potential new competitors, changes in commission pricing, rapid changes in technology, errors or malfunctions in our systems or technology, cash flows into or redemptions from equity mutual funds, ability to meet liquidity requirements
related to the clearing of our customers trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to protect our intellectual property, our ability to execute on strategic transactions or initiatives, our ability to attract and retain talented employees, and our ability to pay dividends or repurchase our common stock in the future. The forward-looking statements included herein represent ITGs views as of the date of this release. ITG undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.
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