London, 11 November 2015 – ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces today that further to the announcement of Tullett Prebon plc (“Tullett Prebon”), the Board of ICAP plc (“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 “Transaction”).
Tullett Prebon intends to acquire all of IGBB in return 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 per cent. 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 per cent. of the Enlarged Tullett Prebon share capital would be issued to ICAP shareholders and 19.9 per cent. to ICAP NewCo. Existing Tullett Prebon shareholders would continue to own 44 per cent. of the Enlarged Tullett Prebon issued share capital.
The Transaction provides a unique opportunity to combine the complementary strengths of two leading global hybrid voice broking franchises to create the largest player in the industry, which will achieve significant cost synergies of at least £60 million.
The Post Trade, Risk and Information and Electronic Markets divisions of ICAP will operate under a new group holding company ICAP NewCo which will be positioned as a leader in the financial technology space, ready to capitalise on the many opportunities it sees in these markets.
As a focused electronic and post trade group with a leading portfolio of financial market infrastructure businesses and products, the ICAP NewCo Group will benefit from ICAP’s significant investment in technology and strong track record of innovation and will be well positioned to capitalise on the many growth opportunities in its markets.
It is expected that ICAP NewCo will cease to be subject to continuing consolidated regulatory capital requirements.
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.
No changes are anticipated to the Board of Directors of ICAP, each of whom is expected to become a Director of ICAP NewCo. On Completion, Ken Pigaga, currently Group Chief Operating Officer of ICAP, will resign from his current position in ICAP and be appointed to the board of Enlarged Tullett Prebon as a director and Chief Operating Officer. Additionally, ICAP NewCo will appoint a non-executive director to the board of Enlarged Tullett Prebon. Michael Spencer will have an honorary title of President of Enlarged Tullett Prebon. He will be available to advise the Board of Enlarged Tullett Prebon but will not be a member of the Board.
Completion is conditional on, inter alia, the approval of shareholders of both Tullett Prebon and ICAP, clearance from certain antitrust authorities, and the consent of various regulatory bodies, and is expected to occur in 2016.
Commenting on today’s announcement, Michael Spencer, Group Chief Executive Officer of ICAP, said: “Today we announce a compelling opportunity to bring together two world class, client focused broking businesses, both with a proud heritage. By coming together they will benefit from improved scale, allowing for a significantly improved product suite and service for customers. Financial regulatory reform means that the global financial markets have profoundly changed and this Transaction means both companies will be better suited to meet the market’s changing needs and better serve our customers. This is an historic moment for both companies and the voice and hybrid broking industry. I have every confidence that this new structure will emerge as a great platform for success.
“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.”
ICAP has also announced its Group interim results today. For the six months ended 30 September 2015, the Group reported revenue of £595 million, 4% below the prior half year. On a constant currency basis, revenue from Post Trade Risk and Information increased by 8% and Electronic Markets by 1% which was offset by a decrease of 14% in Global Broking. On a continuing basis, Global Broking revenue was down 1% on the prior half year. For further details, please refer to the results press release on the ICAP website.