Tullett Prebon to Acquire ICAP’s Voice Broking and Information for over £1 Bln

The company will issue 309.9 new shares to compensate ICAP and ICAP’s shareholders

Tullett Prebon plc (LON:TLPR) and ICAP plc (LON:IAP) have announced the conclusion of the biggest deal in the inter-dealer broking space this year. As reported by Finance Magnates last week, ICAP’s global hybrid voice broking and information businesses will be acquired by Tullett Prebon for a total of over £1.1 billion ($1.67 billion).

Under the agreement, Tullett Prebon will also receive all of the associated technologies with the above mentioned business units that ICAP plc owns ,including iSwap and Fusion and some of the company’s joint ventures and associates.

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The Post-Trade, Risk and Information and Electronic Markets divisions of ICAP will continue operating under a new group holding company named ICAP NewCo, which is aiming to position itself to dominate the financial technology space.

ICAP, Tullett Prebon
ICAP plc restructuring explained, Copyright: Finance Magnates

New Shareholder Structure

Tullett Prebon plc (LON:TLPR) will issue a total of 309.9 million new shares, which amount to about £1.1 billion ($1.67 billion) based on yesterday’s closing price of 358 pence per share. The newly issued shares will amount to 56 percent of the total share capital of Tullett Prebon plc therefore giving a majority stake to ICAP plc and its shareholders.

Inter-dealer brokers continue to play a vital role at the heart of the global wholesale OTC markets

On completion of the deal, a total of 44 percent will be owned by current shareholders of Tullett Prebon plc (LON:TLPR), 36.1 will be owned by ICAP shareholders and 19.9 percent will be owned by ICAP plc (LON:IAP) itself.

Commenting on the announcement, the CEO of Tullett Prebon plc (LON:TLPR), John Phizackerley, said, “Inter-dealer brokers continue to play a vital role at the heart of the global wholesale OTC markets. This important acquisition will deliver to Tullett Prebon shareholders significant cost synergies and gives the combined business greater client and product coverage and a stronger global footprint.”

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“It brings important benefits for clients, shareholders and staff and creates a strengthened platform to deliver our objectives of becoming the world’s most trusted source of liquidity in hybrid OTC markets and the best operator in global hybrid voice broking,” he explained.

ICAP to Focus on Electronic Trading

After the deal, the businesses under ICAP NewCo include all of ICAP’s exchange-like electronic platforms, EBS and BrokerTec; the post-trade risk mitigation businesses, TriOptima and Reset; the transaction processing business, Traiana; the financial technology incubator, Euclid; and ICAP Information Services as it relates to ICAP’s electronic platforms.

We will emerge from this transaction as a pure post-trade services and electronic trading group

After the deal is approved by shareholders, the Chief Operating Officer of ICAP, Ken Pigaga, will resign from his current position and be appointed to the board of Tullett Prebon as a Director and Chief Operating Officer.

In addition, ICAP NewCo will appoint a non-executive director to the board of Tullett Prebon plc.

Commenting on the announcement, the CEO of ICAP plc, Michael Spencer, said, “Financial regulatory reform means that the global financial markets have profoundly changed and this transaction means both companies will be better suited to meet the market’s changing needs and better serve our customers.”

Elaborating on ICAP NewCo, he stated, “We will emerge from this transaction as a pure post-trade services and electronic trading group. Our strategy has consistently been to increase the proportion of revenues derived from these two divisions. This transaction is the next natural step in this strategy.”

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