UK: Tullett, ICAP £1.1 billion brokerage deal hits antitrust hurdle

Tullett Prebon PLC’s £1.1 billion deal to buy a voice-brokerage business from British rival ICAP PLC faces an inquiry from the UK’s competition watchdog.

The Competition and Markets Authority has referred the deal, which would significantly reshape the interdealer brokerage landscape in the U.K., for an “in-depth investigation” to determine if it reduces competition in the sector.

The investigation could take up to six months, a spokesperson for the regulator said on Tuesday.

The deal between longstanding rivals Tullett and ICAP, founded by high-profile City of London figure Michael Spencer, was announced in November last year.

The combination would create the world’s largest interdealer brokerage house with revenue of £1.5 billion a year. Interdealer brokers—which match buyers and sellers of securities on behalf of investment banks—have struggled since the financial crisis. Tougher financial regulations have crimped the trading activity of banks on which the brokers were heavily dependent.

Despite fierce competition in the sector, Mr. Spencer said in November that the two companies had become “a happily married couple”. Upon completion of the deal ICAP plans to begin trading as NEX Group with a focus on electronic trading and after-trading activities.

The CMA said its investigation will only focus on oil products where the merger might gives rise to “a realistic prospect of a substantial lessening of competition” as rivalry from other brokers is more limited.

Full Content: The Wall Street Journal

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