Galaxy Digital to Buy BitGo for About $1.2B in Stock, Cash
The acquisition comes as Galaxy Digital plans a U.S. listing later this year.
May 5, 2021 at 10:24 a.m. UTCUpdated Sep 14, 2021 at 12:50 p.m. UTC
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Galaxy Digital, the cryptocurrency-focused financial services firm run by Michael Novogratz, said it has agreed to buy BitGo, the U.S.-regulated crypto custody specialist, for $1.2 billion in stock and cash.
- Under the terms of the deal, BitGo shareholders will get 33.8 million of newly issued shares of Galaxy Digital common stock and about $265 million in cash, giving the deal a transaction value of about $1.2 billion based on Galaxy Digital's closing share price on May 4.
- Last month, CoinDesk reported the two companies were in advanced talks about a possible deal.
- "The acquisition of BitGo establishes Galaxy Digital as a one-stop shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology," said Novogratz, Galaxy's CEO and founder.
- The deal is another sign of M&A heating up in the digital asset industry following PayPal’s March agreement to buy custody specialist Curv. It also highlights the importance of custodians to this asset class. Crypto is more like cash or diamonds than a stock with an ownership certificate; once it’s gone, it’s gone.
- More specific to Galaxy, it will help the company on its stated intention of becoming a prime broker. One can't be a prime broker without custody.
- Canada-listed Galaxy also said it will "undergo a domestication process" on an intended path to a U.S. listing later this year.
- Last year, BitGo was reported to have been in acquisition talks with fintech giant PayPal, which offered as much as $750 million in cash for the custody company.
- Galaxy, which said it will gain about 400 global net new clients from BitGo, will use its balance sheet to fund the cash consideration, part of which will be deferred up to 12 months post-close, the company said.
- BitGo shareholders will own about 10% of the combined company. BitGo CEO Mike Belshe will become Galaxy Digital deputy CEO and a member of the company's board.
- The deal is expected to close in Q4, subject to regulatory scrutiny and approval by vote by Galaxy shareholders.
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