Tullett to Acquire ICAP’s Global Hybrid Voice Broking Business

  • Splitting off ICAP's voice divisions was `an inevitability'
  • Tullett will issue some 310 million shares to finance the deal

Tullett Prebon Plc has agreed to buy ICAP Plc’s voice-broking business to create the world’s biggest broker of trades between banks in a deal worth more than 1 billion pounds ($1.5 billion).

Interdealer broker Tullett will issue about 309.9 million new shares to ICAP’s shareholders and to the company itself to fund the deal, according to a statement on Wednesday. With Tullett shares worth 359 pence apiece at yesterday’s close, the transaction values the different ICAP businesses at about 1.1 billion pounds.

The deal will transform ICAP, focusing the company on the electronic markets and post-trade services that have driven its growth in recent years.

ICAP Chief Executive Officer Michael Spencer said that shedding the voice businesses in Europe, Asia Pacific and the Americas will allow it to reduce the firm’s excess capital. Spencer said that would free up cash to invest in technology businesses.

“Precisely this capital issue meant that the split was an inevitability at some juncture,” Spencer said in a conference call on Wednesday. “It’s a real liberation of our ability to operate.”

The combined company will save at least 60 million pounds of costs by eliminating duplicated management and support expenses and will have about 5,500 employees.

The acquisition includes the three ICAP voice-broking divisions, its 40.2 percent interest in iSwap, a global electronic-trading platform for interest-rate swaps, and Fusion. The three regional businesses included in the deal employed 1,472 voice brokers at the end of June.

‘Cost Savings’

“Inter-dealer brokers continue to play a vital role at the heart of the global wholesale over-the-counter markets,” Tullett Prebon Chief Executive Officer John Phizackerley said in the statement. “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.”

ICAP’s shares rose 5.4 percent to 497 pence at 10:59 a.m. in London, their biggest rally since the company confirmed that it was in talks with Tullett on Nov. 6. Tullett Prebon’s shares slid 6.9 percent to 334.4 pence.

The board of Tullett Prebon expects the deal to be completed in 2016. ICAP’s Spencer confirmed on the call that Phizackerley’s appointment as CEO of Tullett Prebon last year was the catalyst needed for the deal to take place.

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