Inter-dealer broker Tullett, formerly Tullett & Tokyo Liberty, has reached an agreement to merge with Collins Stewart, the UK-based stockbroking firm. At time of going to press, the overall value of Tullett capital is given as around £251.2 million, the deal is expected to go unconditional in early March.
“This combination enables Tullett to achieve its two principle strategic objectives: to deliver value for our shareholders and to accelerate our ability to take advantage of the consolidating inter-dealer broker marketplace in which we operate,” says Bruce Collins, chief executive of Tullett.
According to a statement, the two companies believe that the enlarged group will provide a number of benefits: it will be able to service the entire range of potential clients and offer more balanced exposures to customers, products and markets. The statement also says that the two companies have complementary risk profiles and that the deal gives Tullett the capital necessary to accelerate its growth plans by fulfilling its strategy to take part in the consolidation of the inter-dealer broker market. It also provides shareholders with the opportunity to benefit from the potential improvements in Tullett’s operating margins and from the scope to leverage both infrastructures, technologies and client bases, it says.
Terry Smith, chief executive of Collins Stewart, who declined an interview on the merger, said in a statement, “The acquisition of Tullett is a major advance for the Collins Stewart Group and creates an enlarged group which will service the entire range of products and potential clients in the financial markets from 19 locations worldwide. This increased diversity of revenues should further safeguard results and shareholders’ returns from a downturn in any one area of the markets and enable the group to continue delivering superior returns. We…look forward to working with Tullett’s management to help them realise their plans for the development of Tullett’s market position.”
Under the terms of the agreement, Collins; Stephen Jack, group chief financial officer of Tullett; and David Clark, an independent non-executive director of Tullett, will join the board of the enlarged group. The current executive committee of Tullett will remain in place to manage its day to day activities. Derek Tullett, who founded the money broker in 1971, will stay on as president. “This is very exciting,” says Tullett, “It takes us into a new era.”
A resolution to change Collins Stewart’s name to incorporate Tullett will be proposed at the company’s next annual meeting. It is intended that both names will be retained as the principle trading names for the respective businesses.
Meanwhile, Tullett is to sell its specialist voice and data network services subsidiary, Gains International, to GS Capital Partners 2000, a Goldman Sachs private equity fund, for up to £15.4 million. The move releases resources to focus on Tullett’s core broking business. Gains will continue to supply voice and data services to Tullett.