Tullett Prebon to acquire ICAP's global hybrid voice broking and information business

Tullett Prebon plc announces that it has agreed terms with ICAP plc for the acquisition by Tullett Prebon of ICAP's global hybrid voice broking and information business, including ICAP's associated technology and broking platforms (including iSwap and Fusion) and certain of ICAP's joint ventures and associates ("IGBB") (the "Transaction").

In consideration for acquiring all of IGBB, Tullett Prebon will issue new shares to ICAP shareholders and to ICAP. The new Tullett Prebon shares issued will represent 56 per cent of the share capital of Tullett Prebon as enlarged by the Transaction (the "Enlarged Group") as at completion of the Transaction ("Completion"). The majority of the new Tullett Prebon shares will be issued to ICAP shareholders, such that on Completion, the issued share capital of the Enlarged Group will be owned 44 per cent by existing Tullett Prebon shareholders, 36.1 per cent by existing ICAP shareholders and 19.9 per cent by ICAP. Tullett Prebon expects to issue approximately 309.9 million new Tullett Prebon shares to ICAP shareholders and to ICAP. Further details on the structuring of the Transaction and conditions associated with the acquisition of all of IGBB by Tullett Prebon are set out in Sections 12 and 14.

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. On an illustrative combined basis, the Enlarged Group:
• Generated historical revenue in excess of £1.5 billion (£811 million from Tullett Prebon and £773million from IGBB);
• Generated adjusted underlying operating profit of £232 million (£121 million from Tullett Prebon and £111] million from IGBB) and
• Will employ approximately 5,500 total staff;

Achieve significant cost synergies of at least £60 million, driving EPS accretion. The estimated £60 million of cost synergies is comprised only of savings arising from the elimination of duplicated management and support costs. In addition to the management and support cost synergies, Tullett Prebon expects to derive, over time, additional efficiencies from the combination of the two businesses, which are expected to at least offset any revenue attrition. While the Transaction is expected to dilute Tullett Prebon's earnings per share in the first year, the delivery of cost synergies and additional efficiencies in the second year is expected to at least offset that dilution, and the Transaction is expected to result in EPS accretion for Tullett Prebon on a fully-phased basis;

Accelerate the delivery of Tullett Prebon's strategy, launched in June 2015, which is designed to deliver revenue and earnings growth over the medium term.

At Completion, IGBB will be acquired with gross debt of £330 million and with sufficient regulatory capital, cash and working capital to meet applicable regulatory requirements and ordinary course operational requirements. IGBB's cash balance at Completion is expected to be equivalent to its gross debt.

Tullett Prebon intends to maintain its annual dividend of 16.85 pence per share during the integration period, with an ambition to grow the dividend over time.

For the period following Completion, Tullett Prebon intends to continue to employ the existing portfolio of brands in use by both organisations, including ICAP, Tullett Prebon, PVM and MOAB and expects both businesses' desks will continue to operate in parallel.

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. The Board of Tullett Prebon currently expects Completion to take place in 2016.

Commenting on today's announcement, John Phizackerley, CEO of Tullett Prebon, said:
"Inter-dealer brokers continue to play a vital role at the heart of the global wholesale OTC markets. This important acquisition will deliver to Tullett Prebon shareholders significant cost synergies and gives the combined business greater client and product coverage and a stronger global footprint. It brings important benefits for clients, shareholders and staff and creates a strengthened platform to deliver our objectives of becoming the world's most trusted source of liquidity in hybrid OTC markets and the best operator in global hybrid voice broking."

Commenting on today's announcement, Rupert Robson, Chairman of Tullett Prebon, said:
"These two organisations have world-class brands and similar values. The rationale for the acquisition is compelling: it fast-tracks our growth strategy and offers a powerful value proposition to our clients. We shall benefit from greater scale, resources for technological development and new product development and we believe that the acquisition can deliver attractive financial returns for shareholders."