TP ICAP PLC (LON:TCAP) on Friday confirmed the agreement of definitive terms for the acquisition of the entire issued share capital of private trading operator, Liquidnet Holdings and its subsidiaries.
This confirmation came over a week after the interdealer broker announced its interest in the dark pool operator’s business and entered into advanced talks.
Announced through the London Stock Exchange, the acquisition terms were agreed at a total consideration of between $575 million and $700 million, which include cash consideration of $525 million, non-contingent deferred consideration of $50 million, and contingent consideration of up to $125 million.
“Acquiring Liquidnet is a unique opportunity to transform TP ICAP’s growth prospects by materially accelerating the execution of our electronification, aggregation, and diversification strategy,” TP ICAP CEO, Nicolas Breteau said in a statement.
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Mentioning the financing of the deal, TP ICAP detailed that it will raise $425 million with rights issues and source another $100 million from the existing debt facilities. The rest, $50 million, will be paid at the completion of the third year of the deal.
Significant Share in the Buy-Side
Liquidnet has a major global buy-side network of over 1,000 institutional asset management clients and also integrates with all major order/execution management systems. The platform collectively manages $33 trillion in equity and fixed-income assets and has access to 45 global markets.
This, according to the announcement, will provide the potential new owner substantial electronic trading and workflow connectivity to the buy-side. Additionally, TP ICAP can diversify its asset exposure.
The confirmation of the deal is now pending with TP ICAP shareholders, and the board is further recommending a one-off 50 percent reduction of the minimum £94 million dividends for FY2020.
“This transaction underscores the relevance and future prospects of a business we started two decades ago, and which has grown to become not only a leader in global institutional equities block trading, but also one of the world’s premier buy-side-focused electronic networks,” Brian Conroy, CEO at Liquidnet, said.