Icap (IAP.L), the world's premier voice and electronic interdealer broker, has agreed to acquire, through its wholly-owned subsidiary ICAP Do Brasil Distribuidora De Títulos E Valores Mobiliários Ltda (ICAP DTVM), all of Arkhe Distribuidora De Títulos E Valores Mobiliários S.A. (Arkhe DTVM), a leading independent broker in Brazil, for an initial consideration of US$17 million, approximately 6X post-tax 2007 earnings for Arkhe.
The agreement is subject to regulatory approvals.
Doug Rhoten, Chief Executive Officer of ICAP Americas, said: "We're very pleased to have reached an agreement to acquire Arkhe, our long-standing partner and one of the top ranked brokerage firms on the BM&FBOVESPA Exchange. Arkhe has a well-established presence in Brazil, an extensive customer base, and a state-of-the-art trading floor. Arkhe's platform melds nicely with our own strengths and with ICAP's core strategy of expanding our LATAM footprint organically and with selected acquisition."
The ICAP Americas group currently generates substantial revenues in Brazilian products through its North America offices. Brazil accounts for two thirds of the industry's revenue potential in South America, and in the past few years, the Brazilian markets have experienced substantial growth. ICAP already has a significant presence in Latin America, with offices in Argentina, Brazil, Chile, Colombia, Ecuador, and Mexico.
Marcos Bodin, Chairman of Arkhe, commented: "Arkhe is a well-established Brazilian financial services company with talented management and staff and long-standing client relationships. We have known ICAP for many years, and today's union creates a perfect combination where our strengths and experience will complement ICAP's."
After the deal is completed, it is expected that the senior management and staff of Arkhe will remain with the business within the ICAP Group.
ICAP has agreed to purchase 100% of Arkhe DTVM. In addition to the initial consideration, ICAP will pay Arkhe an additional amount in the future, subject to the performance of the business. The consideration will be financed from ICAP's existing cash resources.