LONDON: Three firms -- U.S. private equity major Hellman & Friedman, Kohlberg Kravis Roberts and Blackstone -- have formed a consortium to buy out British inter-dealer brokerage firm Collins Stewart Tullet. The three firms were earlier competing against each other to acquire the brokerage.
According to sources, the three have together completed due diligence and an announcement is due any time.
The consortium may offer 660 pence per share of Collins Stewart Tullet, which would value firm's business at 1.4 billion pounds. This will be at a premium of around 100 million pounds.
The three firms refused to comment on the news reports, but sources said there is indeed a common bid. There are several other bidders who continue to vie for Collins Stewart Tullet, and it is possible that the composition of the consortium may change.
Collins Steward Tullet is the world No 2 behind leader Icap in the domain of highly-cash generating inter-dealer broking. Such brokerages function as middlemen in bond, foreign exchange and other derivatives transactions between large banks.
The firm's chief executive Terry Smith is expected to update investors in the next couple of weeks on the status of the negotiations.
Meanwhile, one of the bidders, U.S. buyout firm Thomas H Lee Partners, an investor in the scam-ridden futures broking company Refco, has quit the bidding process. Analysts watching the acquisition plan said banks that would normally finance such deals are hesitant in the light of the Refco fraud, which crippled the commodities broker.
Smith owns some 4 per cent in the company and the acquisition will make him richer by 50 million pounds. It is not clear whether he will continue at the firm after the take-over.
The firm had first revealed about the acquisition bid in August. It had diversified into money and futures broking over the past two years and has received permission to set up China's first money brokerage. It is expected to form a joint venture with a subsidiary of Shanghai International before the year-end.
Posted
on : Mon, 21 Nov 2005 10:25 GMT | Business News
By : Rob Davis
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