29th Sep 2020 18:55
(Alliance News) - FTSE 250 interdealer broker TP ICAP PLC said Tuesday it is in advanced discussions concerning a potential acquisition of New York-based electronic trading network Liquidnet Holdings Inc for a price ranging from USD600 million from USD700 million.
Liquidnet is said to be a specialist in equities dark trading, with a growing presence in fixed income. For the year to the end of June, Liquidnet generated adjusted earnings before interest, taxes, depreciation and amortisation of USD64 million, on revenue of USD339 million.
The payment comprises an upfront consideration of USD550 million, and a deferred non-contingent consideration of USD50 million and an earn-out of up to USD100 million.
TP ICAP expects to pay USD100 million in cash funded from its existing debt facilities on the completion of the deal, and then USD450 million in cash, funded through two upcoming equity placings.
The remaining USD50 million would be funded from senior secured loan notes issued on completion to certain Liquidnet stockholders.
The acquisition is conditional on the approval of TP ICAP shareholders and the completion of the group redomiciliation, by introducing a new holding company in Jersey through a court-approved scheme, expected to be within the first quarter of 2021. There are also regulatory clearances to be considered.
"The potential acquisition would be expected to transform TP ICAP's revenue growth profile, with almost half of the enlarged group's revenue coming from higher-growth businesses and the enlarged group's revenue growth profile expected to increase from low single digit to mid-single digit over the medium-term," the group stated.
"Further, based on TP ICAP's closing share price on the day prior to this announcement, the Potential Acquisition is expected to be broadly earnings neutral in year two, and meaningfully accretive in year three," TP ICAP added.
Shares in TP ICAP closed 1.8% lower at 273.00 pence on Tuesday in London.
By Dayo Laniyan; [email protected]
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