Majestic Research Acquired by ITG

New York – Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker, announced that it has acquired Majestic Research Corp., an alternative research firm specializing in mining proprietary data sets, for $56 million. ITG will rebrand Majestic as ITG Investment Research.  The acquisition reinforces the recent trend of agency brokers to expand their content offerings.

Founded in 2003, Majestic Research is an independent research company that provides institutional investors primary research based on large commercial databases which Majestic typically licenses on an exclusive basis.  Sectors covered include airlines, auto retail, casinos, consumer technology, cruise lines, eCommerce, homebuilders, and pharma & biotech. Majestic analysts provide clients with insights based on the information, although it does not provide buy/sell recommendations.  Majestic acquired Rood Research, a small healthcare research firm, in April 2009.

ITG’s acquisition of Majestic follows its increasing commitment to adding research to its execution capabilities.   In April, ITG made an investment in Disclosure Insight, an independent research firm that analyzes SEC documents to determine if companies are under investigation by the SEC, and became Disclosure Insight’s exclusive distributor.  In July ITG hired hired Jamie Selway who was previously chief economist for Archipelago and in equity derivatives research for Goldman Sachs.

The press release follows:

Independent, Data-Driven Research Offering Enhances ITG’s Capabilities

NEW YORK, Oct 25, 2010 /PRNewswire via COMTEX/ — Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today announced that it has acquired Majestic Research Corp., an independent provider of data-driven equity research for the institutional investment community. Going forward, Majestic will be known as ITG Investment Research.

Majestic Research helps investors gain independent perspectives on companies and their sectors based on proprietary data sources and rigorous analysis. Majestic provides coverage of more than 200 companies in 17 industry verticals as well as macroeconomics and bespoke research reports for approximately 200 clients in the US and Europe. With the addition of Majestic to its platform, ITG offers even more compelling value across the investment continuum to portfolio managers, analysts and traders.

“This acquisition marries the market leader in global agency execution with an emerging force in the business of providing asset managers with investment ideas that generate excess returns,” said Bob Gasser, CEO and President of ITG. “Like ITG itself, Majestic is independent, unbiased and focused on partnering with clients to improve investment performance. We look forward to introducing this compelling offering to our combined client base.”

Tony Berkman, co-founder and CEO of Majestic Research, said, “Given ITG’s focus on leveraging technology and data to drive products, it would be difficult to conceive of an execution platform more well-aligned with our unique research methodology. My colleagues and I are excited about joining ITG and partnering with a broader range of institutional investors.”

The purchase price for Majestic was $56 million, consisting of $53 million in cash and $3 million in converted employee equity awards. ITG expects the acquisition to be accretive to earnings beginning in the first quarter of 2011. ITG management will discuss the transaction in more detail on the Third Quarter 2010 earnings call on October 28th.

Financial Technology Partners LP and FTP Securities LLC (together “FT Partners”) served as exclusive strategic and financial advisor to Majestic Research and its Board of Directors in this transaction.

In reliance upon New York Stock Exchange Rule 303A.08, ITG granted inducement awardspursuant to which an aggregate of 735,253time- and performance-vesting stock units(the “RSUs”)will be awarded to 15employees on October 25, 2010. Each of these employees was previously a Majestic Research employee who joined ITG as a result of the acquisition.Approximately half of the RSUsgranted vest in quarterly installmentson each of the firstfour anniversaries of the date of grant of the award. The remaining RSUsvest based upon the level of attainment of certain performance-based vesting conditions.

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