Tullett Prebon’s purchase of Icap’s global voice-broking business is moving forward, with the two rivals set to put the deal to investor votes before completing the deal in September.
A prospectus will be sent to shareholders of both companies and a vote will be held on March 24, Tullett said in a statement yesterday.
It is set to acquire more than 1,500 brokers that trade by telephone in an all-share deal worth about £1.1 billion. The two interdealer brokers also are applying for regulatory and competition approval in Britain, the United States, Singapore and Australia.
Part of the reasoning for the deal is cost-cutting, after a tough period for brokers. News of the talks emerged in November after Tullett issued a profit warning and said that about 5 per cent of its voice brokers, or 70 people, would lose their jobs because of difficult trading conditions.
Tullett issued 309.9 million shares worth £1.1 billion to pay for the Icap division, which includes a data business.
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The deal will allow Michael Spencer, Icap’s chief executive, to focus on electronic broking and offerings such as post-trade services, which earn more than three quarters of Icap’s profits. Icap will retain a 19.9 per cent stake in the enlarged broking business. Tullett’s shareholders will hold 44 per cent and Icap shareholders 36 per cent.
John Phizackerley, the chief executive of Tullett, said that the deal “provides a unique opportunity to accelerate the delivery of our strategy, and we are in the process of planning the integration of the two businesses to be implemented after completion of the transaction”.
It draws a line under friction between the two brokers, which act as intermediaries between banks and other financial institutions dealing in bonds and other derivatives.
Icap was founded by Mr Spencer in 1986. Tullett was assembled by Terry Smith over the past decade. He stepped down as chief executive to focus on Fundsmith, the fund manager he set up.
For the year to December 31, Tullett reported a 13 per cent increase in revenue to £796 million. Underlying operating profit rose 7 per cent to £108 million. Energy sector revenue rose 102 per cent to £204.3 million during this period, helping to offset falls in treasury products and interest rate derivatives.