IAP.L Regulatory News (IAP)

7 Apr 2008 07:01

ICAP PLC07 April 2008 Press Release ICAP reaches agreement to acquire Link London, April 7 2008 - ICAP plc (IAP.L), the world's premier voice andelectronic interdealer broker, has agreed to acquire, through its wholly ownedsubsidiary Intercapital plc, all of the share capital of The Link Asset andSecurities Company Limited (Link), the leading specialist global equityderivatives broker for an initial consideration of £135 million. Michael Spencer, Group Chief Executive of ICAP, commented "We are very pleasedto have reached agreement to acquire Link. The company enjoys a very strongmarket position as the leading global equity derivatives broker with 136 staffcovering Europe, the Americas and Asia. From its three offices in London, NewYork and Hong Kong it services over 500 customers. We have been very clear that our strategy is to grow ICAP's business bothorganically and by selected acquisition. Equity derivatives are one of the "focus" areas for our voice business which we have identified as having fasterstructural growth opportunities. The market has expanded hugely during the past5-7 years as a result of the search for yield, the demand for absolute returnsand the emergence of volatility as a traded asset class in its own right. Thisis an important further step in building our overall capability in the equitymarkets." Charlie Davies, Group Chief Executive of Link, commented "Since its launch in1997, Link has established itself as the pre-eminent broker in equityderivatives globally. In these markets, where risk can be complex andnon-standard, our ability to understand and relay financial information in anefficient and knowledgeable way, greatly adds to the liquidity available to ourclients. Our strategy is completely consistent with ICAP's and our cultures arecomplementary. We plan to combine Link's strengths in index and single stockderivatives with the majority of ICAP's existing equity derivatives businessoutside the US and do not expect there to be any significant overlap. We firmlybelieve that this combination will be good for our customers and bothorganisations." ICAP has agreed to purchase 100% of the share capital of Link from itsshareholders all of whom are directors or employees of Link. ICAP will pay aninitial consideration of £135 million plus the amount by which Link's net assetsexceed its regulatory capital requirement, which will not exceed £30 million.ICAP will pay an additional amount by way of deferred consideration equal to 25%of nine times the profit after tax for the year ended 31 March 2010 of the Linkgroup after it has been amalgamated with certain complementary ICAP businesses.The aggregate of the initial consideration and the deferred consideration iscapped at £250 million. The consideration to be paid to Link shareholders will be financed by debt. A£150 million term loan facility has been agreed to fund the initialconsideration. This facility is in addition to the recently completedrefinancing of ICAP's existing debt with a new three year revolving agreementfor £520 million of senior bank debt. In the financial year ending December 2007, Link's revenue was £81million (up68% on 2006) and pre tax profit was £22 million. At 31 December 2007, the grossassets of Link were £45 million (net assets: £23 million) including cash of £25million. Following the acquisition, it is expected that all the senior management andstaff of Link including the two co-founders of Link, Charles Davies, Link'sChief Executive Officer, 38 and John Booth, the Chairman of Link, 49, willremain with the business within the ICAP Group. See below for biographies. The acquisition is expected to be accretive to ICAP's 2008/9 adjusted earningsper share. Notice for Analysts and Investors Conference calls will be held at 10:30 BST/05:30 EST for investors and analystsin Europe and 14:30 BST/09:30 EST for US based investors and analysts. For dialin details please contact Maitland on (44) 20 7379 5151. Contacts: Mike Sheard Director of Corporate Affairs +44 (0) 20 7050 7103Candice Adam Corporate Communications +44 (0) 20 7050 7104Neil Bennett Maitland +44 (0) 20 7379 5151 About ICAP plc ICAP is the world's premier voice and electronic interdealer broker and thesource of global market information and commentary for professionals in theinternational financial markets. The Group is active in the wholesale markets ininterest rates, credit, energy, foreign exchange and equity derivatives. ICAPhas an average daily transaction volume in excess of $1.5 trillion, more than 60percent of which is electronic. ICAP plc was added to the FTSE 100 Index on 30June 2006. For more information go to www.icap.com. Deloitte acted as financialadvisers to ICAP and Macfarlanes provided legal advice to ICAP in relation tothis transaction. About Link Incorporated in 1997 in London, Link began its business in European equityderivatives. It established a New York office in 2003 and its Hong Kong officein 2005. As a member of LIFFE, Eurex and Euronext, Europe's main derivativesexchanges, Link operates as an agency or matched principal broker, enablingbanks and other market counterparties to trade anonymously. Additionally Linkhas well established cash equity execution businesses in New York and Londonoffering clients the ability to trade shares on the leading US and Europeanexchanges by means either of Link's exchange memberships, a third-party 'DMA'(Direct Market Access) solution or, in specific markets, through relationshipswith 'local' brokers. Link's cash business is supplemented by a 'Crossbook'team, allowing clients to trade ADRs. The Link Asset & Securities CompanyLimited is authorised and regulated by FSA (No.186764). KPMG Corporate Financeacted as sole financial adviser, and Addleshaw Goddard as principal legaladviser, to Charles Davies and John Booth in relation to this transaction. Biographies Charles Davies (Aged 38) - Group Chief Executive Officer and co-founder of Link • Charles is a significant point of contact for all major clients and is significantly involved in the recruitment, retention and training of all employees • Prior to co-founding Link, Charles worked as a senior equity derivatives broker at Sunrise and was a graduate trainee at Cargill Investor Services. He is a law graduate of Durham University John Booth (Aged 49) - Executive Chairman and co-founder of Link • John has had a successful career in finance joining Merrill Lynch in 1983 where he worked mainly in US equities. He left to co-found EF Hutton International Associates in 1986 which was subsequently acquired by Prudential-Bache where John worked for from 1988 to 1993. • In 1993 John joined Bankers Trust as Managing Director and Head of International Equities • John is also Non-Executive Chairman of Integrated Asset Management Plc, Maintel Holdings Plc and sits on the Board of Oldfield Partners Ltd • John is a graduate of the University of Oxford This information is provided by RNS The company news service from the London Stock Exchange