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Deals

U.S. justice officials seek details on Tullett-ICAP deal

(Reuters) - The U.S. Department of Justice has requested additional information over British interdealer broker Tullett Prebon Plc's TLPR.L proposed acquisition ICAP Plc's IAP.L voice broking business, the companies said on Tuesday.

Tullett said it believed the review was focused on the shareholding and governance arrangements to be put into place after completion of the deal, which it still expected to occur this year.

The company agreed in November to merge with larger peer ICAP’s global hybrid voice broking and information business in a 1.11-billion-pound deal to better compete in a sector where trading volumes have shrunk.

Interdealer brokers, which match buyers and sellers of currencies, bonds and other tradable instruments, have been hit in recent years by regulation designed to rein in the riskier trading activities of their traditional investment bank clients.

Traditional telephone broking services have also faced sweeping reforms, as regulators push more derivatives trading onto electronic platforms to make the market more transparent.

Kicking off consolidation among interdealer brokers this year, BGC Partners BGCP.O acquired U.S. rival GFI Group last year after a protracted takeover battle.

The Tullett-ICAP deal effectively brings together two of the three largest interdealer brokers globally.

After the deal completion, ICAP is expected to hold 19.9 percent and its shareholders 36.1 percent of an enlarged Tullett. Tullett’s existing shareholders are to own 44 percent of the new company.

Tullett, which last week reported higher activity in some of its traditional products for the last two months of 2015, said on Tuesday it intended to respond to the U.S. justice department’s request “as quickly as practicable”.

The DoJ could not immediately be reached for comment outside of regular business hours in the United States.

Peel Hunt analyst Stuart Duncan said the review wasn’t a “massive surprise” and would most likely delay the deal, rather than block it.

ICAP said, separately, that it remained confident that the necessary clearances would be obtained. The deal also needs to be cleared by UK regulators.

Representatives for both companies declined to comment further.

Tullett shares were down 1.5 percent at 333.9 pence in slim trading on the London Stock Exchange on Tuesday. ICAP’s stock slipped marginally to trade at 473 pence by 0838 GMT.

Reporting by Esha Vaish, Soumithri Mamidipudi and Viyda L Nathan in Bengaluru; Editing by Sunil Nair

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