Major financial services and investment management firm Galaxy Digital has agreed to acquire crypto services provider BitGo.
"The acquisition will position Galaxy Digital as a leading global full-service platform for institutions seeking access to the crypto economy, offering an unparalleled breadth of industry-leading products and services at scale," the company said in the press release.
Under the terms of the agreement, the consideration to BitGo shareholders will consist of 33.8m of newly issued shares of Galaxy Digital common stock and USD 265m in cash (subject to adjustments and deferred purchase considerations), suggesting an aggregate transaction value of approximately USD 1.2bn based on Galaxy Digital's closing share price on May 4.
The cash consideration will be funded from the firm's balance sheet, with "a significant portion" deferred up to 12 months post-close.
Galaxy Digital will issue incremental shares of its common stock to BitGo's shareholders in exchange for BitGo's net digital assets at close, they said. BitGo shareholders will own approximately 10% of the pro forma company.
The acquisition is expected to close in the fourth quarter of 2021, subject to approval by Galaxy Digital's shareholders, regulatory approvals, and other considerations.
The move is meant to establish the firm as "a one-stop-shop for institutions," said the CEO and Founder Mike Novogratz. The acquisition will provide Galaxy Digital with the power of the technology, solutions, and people that "will unlock unique value for our clients and drive long-term growth for our combined business," he added.
The key benefits from the deal include adding over 400 global net new clients to Galaxy Digital, introduces multiple new business lines to the firms, such as a regulated client custody solution from BitGo Trust Companies in South Dakota, New York, Switzerland and Germany, as well as expanding the firm's geographic reach.
"Substantially all current BitGo employees" will be retained, and the key members of the management team will be offered employment agreements. Mike Belshe, Co-founder and CEO of BitGo, will join as Deputy CEO of Galaxy Digital and will become a member of the company's Board of Directors.
BitGo, founded in 2013, today has over USD 40bn of assets under custody, serving over 150 exchanges and over 400 institutional clients.
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