US interdealer broker Cantor Fitzgerald has turned down a $12 per share offer for its electronic bond trading network eSpeed from London-based brokerage Tullett Prebon.
In a statement Tullett Prebon says it has been informed by eSpeed that Cantor is not interested in selling its controlling interest in the eSpeed business on the proposed terms.
Under the proposed deal Tullett would pay $12 cash for each eSpeed class A common share. The offer was also subject to eSpeed's outstanding class B shares being converted to class A shares.
Terry Smith, chief executive of Tullett Prebon, says a first approach to eSpeed two years ago was rejected but Tullett continues to regard eSpeed's strategic fit wth its business as "compelling".
"We believe that our proposal is in the best interests of eSpeed's shareholders other than Cantor and those associated with it, and would unlock shareholder value that is now unavailable to the minority shareholders," says Smith. "Moreover, we believe that some of the major dealer clients of eSpeed would prefer its platform to be owned and operated by Tullett Prebon so that the proposed change of ownership could be expected to enhance the utility and eventual value of the platform."
In recent weeks bond trading network eSpeed has come under increased pressure for a change in ownership from hedge fund WC Capital Management which holds a 6.4% stake in the company and Chapman Capital, which last month disclosed a 9.3% stake in eSpeed.
As well as calling for a formal split of eSpeed and Cantor Fitzgerald, Chapman Capital has demanded that eSpeed's board of directors retain an independent auditor to review the two firms' joint services agreement.
In the wake of the Tullett rejection, Chapman Capital has today called for eSpeed's non-affiliated owners to be granted consent to replace the firm's directors Albert Weis, John Dalton, Barry Sloane, and Barry Gosin at eSpeed's AGM.
In a statement Robert Chapman, managing member of Chapman Capital, says: "Today's disclosure of the seemingly impulsive rejection of Tullett Prebon Plc's premium acquisition proposal has done nothing but heighten our concerns that Napoleonic behavior continues to be condoned by eSpeed's director fiduciaries."