UPDATE 1-Inter-Dealer Broker TP ICAP Acquires Liquidnet for up to $700M

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Oct 9 (Reuters) – TP ICAP, the world’s largest inter-dealer broker, agreed on Friday to buy electronic trading network Liquidnet for a revised price of between $575 million and $700 million and announced a rights issue of $425 million to finance the purchase.

Liquidnet, which has more than 1,000 buyside customers, will help TP ICAP’s digital push, the company said.

“We believe TP ICAP’s strong dealer relationships and product expertise are highly complementary to Liquidnet’s electronic capabilities and global customer base,” said Nicolas Breteau, TP ICAP’s Managing Director.

The deal, the largest in TP ICAP’s history, has caused the company’s share price to plummet 15% since talks were announced.

The lower end of the consideration was revised down from $600 million according to TP ICAP’s statement last month when it said it was in advanced talks to acquire Liquidnet.

The London-based company, which is itself a combination of Tullett Prebon and ICAP brokers, added that if the deal gets the green light from shareholders, the board intends to pay only half of the minimum dividend of 94 million pounds ($121.72 million) for 2020 to fund the buyout.

TP ICAP said the combined group will target mid-single-digit revenue growth over multiple cycles, with Liquidnet expected to improve its underlying operating margin by around 300 basis points.

The deal will start increasing underlying earnings in the third year of closing, TP ICAP said. ($1 = 0.7723 pounds) (Reporting by Muvija M in Bengaluru; Editing by Krishna Chandra Eluri)

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