Galaxy Digital (GLXY) Buying BitGo In $1.2 Billion Deal

By Amit Chowdhry ● May 8, 2021
  • Galaxy Digital Holdings Ltd. (TSX: GLXY) announced recently that it agreed to buy BitGo in a $1.2 billion deal. These are the details.

Galaxy Digital Holdings Ltd. (TSX: GLXY) — a financial services and investment management innovator in the digital asset, cryptocurrency, and blockchain technology sectors — announced recently that it agreed to buy BitGo. BitGo is a leading independent digital assets infrastructure provider. 

This acquisition will position Galaxy Digital as a leading global full-service platform for institutions seeking access to the crypto economy, which offers a number of industry-leading products and services at scale.

BitGo is known as the first independent regulated custodian, purpose-built for digital assets. And since its founding in 2013, BitGo has been a pioneer in developing leading custody and wallet infrastructure products, financial products including prime lending, trading, and portfolio management as well as tax solutions that mitigate risk and optimize capital efficiency. Today it is a leading custody provider with more than $40 billion of assets under custody, serving over 150 exchanges and over 400 institutional clients. And BitGo processes over 30 billion monthly transactions, support the custody of more than 400 coins and tokens, and provides clients with the most comprehensive insurance available in the market.

BitGo’s product suite is complementary with Galaxy Digital’s existing offerings across Asset Management, Trading, Investment Banking, and Mining. And the combined business will be uniquely positioned to serve the entirety of clients’ financial services needs whether they are storing assets or transacting. And Galaxy Digital believes being best equipped to meet evolving client needs will be the defining factor for industry leadership.

Through this deal, it will introduce multiple new business lines to Galaxy Digital, including a regulated client custody solution from BitGo Trust Companies in South Dakota, New York, Switzerland, and Germany. And it adds over 400 global net new clients to Galaxy Digital. Plus it diversifies the business with greater contribution from reoccurring revenue that is significantly less correlated with digital asset prices.

Under the terms of the merger, the consideration to BitGo shareholders will consist of 33.8 million of newly issued shares of Galaxy Digital common stock and $265 million in cash, subject to certain adjustments and deferred purchase considerations – implying an aggregate transaction value of approximately $1.2 billion based on Galaxy Digital’s closing share price on May 4, 2021.

Galaxy Digital is going to use its balance sheet to fund the cash consideration, a significant portion of which will be deferred up to 12 months post-close. And Galaxy Digital will issue incremental shares of its common stock to BitGo’s shareholders in exchange for BitGo’s net digital assets at the close.

The deal has been approved by the boards of directors of both Galaxy Digital and BitGo. And the acquisition is expected to close in the fourth quarter of 2021, subject to approval by Galaxy Digital’s shareholders of the domestication of Galaxy Digital as a Delaware corporation and an internal restructuring as well as certain related matters and other acquisition-related closing conditions and regulatory approvals.

KEY QUOTES:

“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. The power of the technology, solutions, and people we will have as a result of this acquisition will unlock unique value for our clients and drive long-term growth for our combined business. We are excited to welcome Mike Belshe and the talented BitGo team to Galaxy Digital.”

— Mike Novogratz, CEO and Founder of Galaxy Digital

“Joining Galaxy Digital represents an exciting new chapter for our business, as our current clients gain access to a wide set of financial solutions. We will now be in a position to offer our best-in-class digital asset infrastructure capabilities to significantly more corporate, institutional, and high net worth investor clients.”

— BitGo CEO and Founder Mike Belshe

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.