Tullett Prebon Considering Buying Icap’s Global Broking Business

The deal between the interdealer brokers – the players who buy and sell bonds and derivatives for the big investment banks – would mark the latest consolidation move in an industry hammered by low trading volumes and tougher regulations.

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.

“It accelerates ICAP’s transformation to being a financial technology business while still giving it the ability (via the issue of the new Tullett shares) to benefit from the likely significant cost savings available to Tullett by its “doubling-up” in voice/hybrid broking”, he said. With the two parties already in talks, details, as well as the deal itself could be announced as early as the following week according to a recent report on the Evening Standard.

Mid-cap broker Tullett said this morning there is “no certainty” that any deal will be agreed but it will update the market accordingly.

Michael Spencer’s ICAP is to take a majority stake in Tullett Prebon in the biggest shake-up of the City’s broking world for a generation, the Independent understands. More than 2,300 Icap staff would move to Tullett. Finally, Barclays raised their target price on shares of Tullett Prebon Plc from GBX 365 ($5.63) to GBX 385 ($5.94) and gave the company an “equal weight” rating in a report on Wednesday, July 29th.

For Tullett, the acquisition of ICAP’s voice and electronic-hybrid brokerage business should allow it to streamline, saving money on the combined operation.

News of a potential merger comes after Tullett Prebon released a pretty pessimistic trading update on Friday morning. Another added that the rival broking businesses could be run against each other and “then the strongest desks survive”.

Chinese film distributor Bona Film Group Ltd will invest $235 million into a slate of Twentieth Century Fox movies, the latest in a wave of tie-ups between Hollywood and Chinese partners to tap China’s fast-growing box office. Tullett – also in takeover talks in 2010 – has more recently struck smaller deals such as last year’s $112 million swoop for oil trader PVM. Operating margins will be around 1.5% below past year, prompting Peel Hunt to trim £12 million off profit forecasts.