- TP ICAP plc to acquire Liquidnet for up to £537 million.
- It will fund the buyout with a £326 million rights issue.
- The acquisition will help TP ICAP expand its digital footprint.
The world’s largest inter-dealer broker, TP ICAP plc (LON: TCAP) said on Friday that it will acquire Liquidnet (electronic trading network) for £441 million to £537 million. Originally, the company wanted to buy Liquidnet for £460 million, as per its bid in September. TP ICAP also expressed plans of raising £326 million via a rights issue to fund the announced acquisition.
Liquidnet currently boasts over 1 thousand buy-side clients. As per the experts, the acquisition will help TP ICAP expand its digital footprint after the completion of the transaction.
CEO Nicolas Bretaeu’s comments on Friday
CEO Nicolas Bretaeu of TP ICAP commented on the news on Friday and said:
“We believe that TP ICAP’s strong dealer relationships and product expertise are highly complementary to Liquidnet’s electronic capabilities and global buy-side customer base.”
The Liquidnet deal will market the largest for TP ICAP in its history. Since last month when the London-based company entered advanced talks with Liquidnet, its per-share price has seen a 15% decline in the stock market.
Shares of the company closed a little under 5% down on Friday at 228 pence per share. In comparison, TP ICAP was trading at a much higher 417 pence per share at the start of 2020. Interested in investing in the stock market online? Here’s a simple guide to get you started.
TP ICAP’s minimum dividend for 2020 currently stands at £94 million. Upon shareholders’ approval for the deal, the company said, its payout was likely to be cut in half to fund the buyout. Earlier this week, TP ICAP named David Everson as Head of Matchbook Credit EMEA.
TP ICAP’s underlying operating margin to improve
For the medium-term cross-cycle revenue, TP ICAP added, the merged company will aim for mid-single-digit growth. The FTSE 250 listed firm also said that Liquidnet was expected to result in an improvement of roughly 300 basis points in its underlying operating margin.
TP ICAP’s underlying earnings will begin to reflect the impact of Liquidnet acquisition by the third year after completing the transaction. In separate news from the United Kingdom, British Land said on Friday it will reinstate its dividend in the near future as performance improved in the second quarter.
At the time of writing, the London-based global firm has a market cap of £1.28 billion and a price to earnings ratio of 23.34.