Tullett says GFI deal due within six weeks

Tullet Prebon, the interdealer broker, yesterday said that it expects a planned merger with US rival GFI to be completed within six weeks, as it reported a 41 per cent growth in interim net profits, helped by volatile markets.

Terry Smith, Tullett’s chief executive, said the company was focusing on the merger – which could be completed early next year – to create a big hitting brokerage to rival current market giant Icap.

A spokesman for Tullett Prebon said: “While it’s not a done deal and it could take time to resolve some issues, we expect to reach an agreement within six weeks.”

He said the speed of the deal was not due to worries about a rival bid and suggested that Tullett and New York-based GFI are the only two large brokers for whom a merger would be possible.

Tullett, with a market capitalisation of about $1.9bn (£970m), is likely to be the senior partner in the deal with GFI, which has a market capitalisation of just $1bn.

Speculation has been rife about the exact nature of any deal, particularly with regard to the stake that GFI chairman Michael Gooch would be left holding, given that he currently owns 43 per cent of the company.

The issue of who would run the group could be another sticking point. Gooch founded GFI in 1987, while Smith has been chief executive of Tullett since 2006.

In its interim report, Tullet revealed that post-tax profit rose to £48.4m in the six months to the end of June, with a 26 per cent increase in
revenues to £468.3m, helping to offset a 72 per cent rise in its electronic
broking investments.

The company has been actively recruiting despite the turbulent economic conditions and Smith said it would continue to focus on developing markets such as Latin America. But he conceded that growth was likely to slow in the second half.