Galaxy Digital acquires crypto custody and asset infrastructure provider BitGo
Galaxy Digital, a financial services and investment management company operating in the cryptocurrency and blockchain technology sectors, announced today that it has agreed to acquire BitGo, a bitcoin & blockchain-asset infrastructure provider.
The deal is worth an estimated $1.2B based on Galaxy Digital’s closing share price on May 4, 2021.
BitGo’s product suite is complementary to Galaxy Digital’s existing offerings across asset management, trading, investment banking, and mining. The combined business will be uniquely positioned to serve the entirety of clients’ financial services needs, whether they are storing assets or transacting…
“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 Mike Novogratz, CEO, and Founder of Galaxy Digital. “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.”
Since its founding in 2013, BitGo has been a leader in developing custody and wallet infrastructure products for cryptocurrency users. Today, BitGo is a leading custody provider with over $40 billion of assets under custody, serving over 150 exchanges and over 400 institutional clients. BitGo processes over 30 billion monthly transactions, support the custody of more than 400 coins and tokens and provides clients with comprehensive insurance.
“Joining Galaxy Digital represents an exciting new chapter for our business, as our current clients gain access to a wide set of financial solutions,” said BitGo CEO and Founder, Mike Belshe. “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.”
Key Transaction Benefits
- Introduces 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.
- Adds over 400 global net new clients to Galaxy Digital.
- Diversifies the business with greater contribution from reoccurring revenue that is significantly less correlated with digital asset prices.
- Institutional-grade levels of security and operational performance with SOC 1 Type 1 and Soc 2 Type 2 audits.
- Accelerates product innovation and development capabilities by adding over 50 engineers and key product and security infrastructure personnel.
- Expands the firm’s geographic reach, with the addition of a West Coast office in San Francisco, as well as global offices and a significant international client base.
- Immediate revenue synergy opportunities that, paired with the other strategic benefits, support the value of the acquisition.
Under the terms of the merger agreement, 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 will use its balance sheet to fund the cash consideration, a significant portion of which will be deferred up to 12 months post-close. Additionally, 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.
BitGo shareholders will own approximately 10% of the pro forma company. Galaxy Digital to retain substantially all current BitGo employees and enter into employment agreements with key members of the management team. Upon closing, Mike Belshe will join as Deputy CEO of Galaxy Digital and will become a member of the company’s Board of Directors.
The transaction has been approved by the boards of directors of both Galaxy Digital and BitGo. 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 the internal restructuring described below, as well as certain related matters and other acquisition-related closing conditions and regulatory approvals.