TCV to Buy Stake in MarketAxess
MarketAxess Holdings Inc. said private-equity and venture-capital firm Technology Crossover Ventures agreed to purchase a minority stake worth $35 million in the electronic-trading-platform operator.MarketAxess -- whose platforms include those for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities -- also said its board adopted a three-year stockholder-rights plan, or poison pill. The company said the plan is designed to protect stockholder value during any future unsolicited acquisition attempts.
Upon closing, TCV will have about a 10% stake in MarketAxess and the right to elect one member of the company's board.
Under the terms of the deal, TCV will get 35,000 shares of preferred stock, covertible into 3.5 million shares of MarketAxess stock at a conversion price of $10 a share, as well as 10-year warrants to purchase 700,000 more shares of stock at $10 a share. Shares of MarketAxess closed Monday at $7.49 and there was no premarket activity.
"This additional capital will allow us to invest in broadening our capabilities while actively managing our balance sheet to build stockholder value," said MarketAxess Chairman and Chief Executive Richard M. McVey. "TCV has a long history of success in the financial-technology space and we will benefit from their expertise as well as their industry relationships."
The investment by TCV comes several months after the fund bought a $55 million stake in TheStreet.com Inc., also getting preferred stock and warrants in that deal.
TCV General Partner Robert Trudeau said, "Our investment in MarketAxess reflects the strength of their client franchise, their e-trading leadership position in large global credit markets and the superior growth opportunity for their technology solutions product offering."
As for the poison pill MarketAxess adopted, it will go into effect if any person or group becomes the beneficial owner of 20% or more of the company's stock, or if a tender or exchange offer is commenced that would result in a beneficial ownership of at least 20%. The company said the plan's adoption "was not made in response to any specific attempt to acquire the company or its shares."
Companies often use poison pills to avoid a hostile takeover by triggering the issuance of new shares, driving up the costs of such a takeover and making it effectively impossible for shareholders to increase their stake beyond a set threshold. But they have become less in vogue in recent years.
Write to Donna Kardos at donna.kardos@dowjones.com