Tullett Prebon in Talks to Buy ICAP's Broking Business

Interdealer broker Tullett Prebon PLC is in advanced discussions to acquire the global broking business of its rival ICAP PLC, according to statements issued by both firms Friday.

The acquisition, which is still under discussion and yet to be completed, is the latest shake-up for the squeezed broking business of the City of London.

The business has come under mounting pressure as trading activity has shifted from voice to electronic platforms. Profitability has also been hit by stricter regulation.

Any deal would include ICAP's technology and broking platforms. Under a deal Tullett would issue new shares, which would be distributed to ICAP's shareholders, the firms said. ICAP would retain a minority stake in the enlarged Tullett Prebon group.

ICAP's global broking business together with iSwap totaled £ 808 million ($1.25 billion) in the year to March 31, compared with ICAP's total revenue of £ 1.28 billion.

London-based ICAP and Tullett Prebon are among the world's largest interdealer brokers. They act as intermediaries between investment banks and the market, by selling financial instruments such as bonds, currencies and derivatives.

Both firms announced head count reductions and strategic reviews to their business in recent months.

"Consolidation in this industry, and the disappearance of some names, is inevitable," said Frederic Ponzo, managing partner of consultancy Greyspark. He described the pressure from the shift to electronic trading and regulation for the brokers as "massive."

Write to Chiara Albanese at [e-mail]

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November 06, 2015 07:15 ET (12:15 GMT)

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