Tullett Prebon's Deal With ICAP on Track to Finish by September

  • Shareholder vote on transaction is planned for March 24
  • Revenue increased 13% last year to 796 million pounds

Tullett Prebon Plc, which is buying rival ICAP Plc’s voice-broking division, said the transaction is on pace to conclude by September as it prepares for a shareholder vote.

A prospectus will likely be sent to shareholders of both companies on March 2 and a vote on the transaction held March 24, according to a statement on Tuesday. While the completion of the deal depends on competition authorities and regulators, finishing the transaction in the third quarter is a good estimate, according to Tullett Chief Executive Officer John Phizackerley.

“It is on track and there’s no reason to believe it won’t conclude somewhere around the third quarter,” he said in a telephone interview. “We’re pretty confident about that.”

To combat pressures in the interdealer broker business, Tullett made a bet on energy and commodities trading that paid off last year. The company bought PVM Oil Associates Ltd., which primarily deals in petroleum products and crude oil, in 2014 for $160 million. It later snapped up U.S. energy broker Moab Oil Inc. for about $27 million.

“As the cycle has evolved, it turns out that energy, commodities and equities had a particularly good 2015,” Phizackerley said. “You’ll always see us developing new products and services. That’s in our nature; that’s in the DNA of the brokerage business.”

Interdealer brokers have struggled globally as their bank customers have scaled back fixed-income, currencies and commodities operations amid tougher regulations. Years of low interest rates have suppressed the volatility and trading that typically benefits brokerages.

Tullett’s revenue increased 13 percent in 2015 to 796 million pounds ($1.11 billion). Excluding sales from its PVM business, revenue declined 2 percent. The company is cutting its broker headcount by 7.5 percent, or 70 employees in business lines including Treasury products, interest-rate derivatives and in fixed income. The company will have about 5,000 employees after the ICAP transaction is completed, Phizackerley said.

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