ICAP agrees to sell hybrid voice broking and information business to Tullett Prebon

Further to an earlier report about discussions between ICAP plc (LON:IAP) and Tullett Prebon Plc (LON:TLPR), both companies have issued statements today, confirming that a deal was agreed.

The Board of ICAP has agreed terms with Tullett Prebon for the disposal by ICAP of its global hybrid voice broking and information business to Tullett Prebon, including ICAP’s associated technology and broking platforms (including iSwap and Fusion) and certain of ICAP’s joint ventures and associates (“ICAP’s Global Broking Business” or “IGBB”).

The Post Trade, Risk and Information and Electronic Markets divisions of ICAP will operate under a new group holding company ICAP NewCo.

ICAP NewCo’s businesses will include:

  • ICAP’s exchange-like electronic platforms, EBS and BrokerTec;
  • the post trade risk mitigation businesses, TriOptima and Reset;
  • the transaction processing business, Traiana;
  • the financial technology incubator, Euclid; and
  • ICAP Information Services as it relates to ICAP’s electronic platforms.

Tullett Prebon plans to acquire all of IGBB in exchange for the issue of new shares in Tullett Prebon to a new holding company of the ICAP group (“ICAP NewCo”) and to ICAP’s shareholders, representing in aggregate 56% of the Enlarged Tullett Prebon (“Enlarged Tullett Prebon”) issued share capital as at completion of the Transaction (“Completion”).

Subject to the satisfaction of certain conditions and the exercise of an option arrangement (further details of which are set out in Section 8 below), following Completion, 36.1% of the Enlarged Tullett Prebon share capital would be issued to ICAP shareholders and 19.9% to ICAP NewCo.

Existing Tullett Prebon shareholders would continue to own 44% of the Enlarged Tullett Prebon issued share capital.

The deal is set to create the largest player in the industry, which will achieve significant cost synergies of at least £60 million.

Completion is subject to, inter alia, the approval of shareholders of both Tullett Prebon and ICAP, approval from certain antitrust authorities, and the consent of various regulatory bodies. The deal is set to be completed in 2016.

Commenting on today’s announcement, Michael Spencer, Group Chief Executive Officer of ICAP, said:

“ICAP NewCo will emerge from this Transaction as a pure post trade services and electronic trading group. Our strategy has consistently been to increase the proportion of revenues derived from these two divisions. This Transaction is the next natural step in this strategy. ICAP has a long history of investing in innovative products and new technologies. We have been at the forefront of the electronification of trading infrastructures and have continued to invest heavily in risk mitigation and efficient workflow solutions. This, combined with a top class management team with a strong track record of successful innovation, means that ICAP will be better positioned to capitalise on the increasing demand for electronic and post trade products and services.”

To view ICAP’s official announcement about the deal, click here.

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