US-based ICE touted as the Tullett bidder

AMERICAN exchange operator IntercontinentalExchange (ICE) has been touted as the most likely bidder for Tullett Prebon, the inter-dealer broker headed by Terry Smith, which yesterday confirmed it was in early-stage talks with an unnamed potential buyer.

Tullett said it was in preliminary discussions which “may or may not lead to an offer being made for the entire issued share capital of the company”.

Speculation swirled around the market yesterday as to the identity of the bidder.

Other names put forward as potential candidates include the London Stock Exchange (LSE) which could run this company alongside its capital markets business. Under former chief executive Clara Furse the LSE held abortive talks about tying up with rival broker Icap.

Other potential predators include US inter-dealer broking rival GFI Group, with which Tullett held merger talks in 2008, and Australian bank Macquarie, which analysts said might be interested in the group as an investment buy.

“With Tullett’s low rating, low capital requirements and high capacity for cash generation, it is easy to see why a financial buyer such as Macquarie might view it as an attractive proposition,” said Sarah Ing, analyst at Singer Capital Markets.

ICE, which City A.M. understands is the most probable bidder, is a New York Stock Exchange-listed exchange operator with a market cap of just over $8bn (£5.35bn).

Its London-based ICE Futures European arm specialises in the global energy markets, accounting for half of the world’s trading in crude and refined oil futures.