COLLINS Stewart Tullett, the broker and bond dealer, is expected to announce details of the planned £135 million purchase of Prebon Yamane, a rival inter-dealer broker, at the end of this week.
The deal was announced in outline in May, but Terry Smith, the Collins Stewart chief executive, promised an update when his company released its interim figures. It is understood that the figures, which had been due tomorrow, have been delayed until Friday so fuller information on the merger can be issued.
Collins Stewart is putting its Tullett bond-broking business together with Prebon, creating a merged entity with market share equal to that controlled by Icap, the biggest company in the sector.
Both will have about a quarter of all inter-dealer broking, and the deal sets the scene for a head-to-head struggle between Mr Smith, a former boxer, and his old rival Michael Spencer, one of the City’s richest men and chief executive of Icap.
Analysts say that a Tullett-Prebon merger would be very profitable for Collins Stewart because of cost savings that could be achieved. Margins in Tullett are thought to be as little as half those of Icap, although Friday’s interims should show improving performance in the Collins Stewart business. The summer has seen detailed negotiation between the two parties to share out executive responsibilities in a merged business.
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Inter-dealer brokers bring together buyers and sellers of bonds and financial derivatives. The bonds market has seen explosive growth in the past couple of years, linked to turbulent conditions in equity markets and plentiful issues of US government debt.