Interdealer broker Icap has signed contracts to acquire select businesses of consortium-backed fixed income platform BrokerTec for up to £181 million.
Icap signed a letter of intent to acquire the majority of BrokerTec's trading operations in August 2002. The deal is conditional on regulatory approval in the US, where the Department of Justice has been investigating BrokerTec's operations for evidence of anti-competitive business practices. The probe is expected to be completed in mid-March 2003.
In the nine months to 30 September 2002 the BrokerTec businesses being acquired by Icap (excluding BrokerTec Futures Exchange and BrokerTec Clearing Company) had revenue from electronic broking and data sales of $73.0m and generated a normalised profit before tax of $14.9m.
Michael Spencer, Icap group chief executive, says the acquisition will yeild additional voice broking revenues from increased access to liquidity in benchmark bonds. "Moreover, non-overlapping Icap customers will gain the ability to access the BrokerTec platform and information vendors are expected to value the improved market data generated by the combined business," he adds.
The BrokerTec system has been created around a trading platform provided by OM Technology. Icap says that both the BrokerTec and its own ETC electronic broking platforms will "continue to be used where their specific technologies are appropriate to the markets they serve."
The company expects that there will be integration between the platforms to create a common user interface and to extend a facility for brokers to interact with BrokerTec.
In the longer term says Icap, "there will be increasing use of common technologies in the development of Icap's hybrid electronic and voice broking platforms. These common technologies will provide Icap with a successful electronic broking platform with proven functionality and low operating costs."