Galaxy Digital to acquire BitGo custodian for about $1.2 billion

Galaxy Digital, Mike Novogratz’s cryptocurrency merchant bank agreed to acquire BitGo, a custody-services provider. The deal value is around $1.2 billion in stock and cash.

In late April, reports said the parties were close to an agreement.

“The acquisition of BitGo makes Galaxy Digital a single hub for institutional services and significantly accelerates our mission to institutionalize the digital asset ecosystem and blockchain technology,” said Galaxy Digital founder and CEO Mike Novogratz.

According to the press release, BitGo serves more than 150 exchanges and 400 institutional clients, processing more than 30 billion transactions per month. The custodian supports around 400 cryptocurrencies and tokens, with assets under custody exceeding $40 billion.

Among the advantages Galaxy Digital cited for the deal, include:

• the emergence of several new lines of business, including regulated custody services in South Dakota, New York, Switzerland and Germany;
• adding 400 new clients worldwide;
• diversification of the business;
• an increase of the team by more than 50 engineers and specialists;
• expansion of the firm’s geographic footprint, thanks to an office in San Francisco.

Under the terms of the merger agreement, BitGo shareholders will receive 33.8 million newly issued Galaxy Digital common shares and $265 million in cash. Based on Galaxy Digital’s stock price at the close of trading on May 4, 2021, the deal was valued at roughly $1.2 billion.

BitGo shareholders will own about 10% of the combined company.

The deal is expected to close in the fourth quarter of 2021, subject to regulatory approvals and Galaxy Digital shareholders’ approval of moving the firm to Delaware.

Following the acquisition, BitGo CEO Mike Belshe will become Novogratz’s deputy and will join Galaxy Digital’s board of directors.

Earlier in October 2020, reports surfaced that PayPal to acquire BitGo. Later, it emerged that talks had collapsed.

In March, PayPal announced the acquisition of another crypto custodian — Curv.