Now the timing of the Tullett talks may entirely be a coincidence, but it's certainly curious that the story would leak a day after GFI was handed a legal setback from a New York state court in a case in which it was arguing corporate espionage. The court refused to grant GFI an injunction to prevent 20 former employees from going to work for rival firm, Tradition Asiel Securities Inc. The alleged staff raid reportedly wiped out $450 million of GFI's market cap, notes a Crain's story, leaving it with $1.35 billion. Despite the setback, GFI plans to move forward with its case.
Meanwhile, talks with Tullett Prebon are at an early stage and may not result in a transaction, according to a statement from the London firm. GFI also confirmed the talks, calling them "non-exclusive." GFI said it won't comment further until an agreement is reached or talks end.
Tullett Prebon is the world's second-largest interdealer broker behind Icap plc, while GFI is the market leader in the field of credit derivatives. Based on current prices, the combined equity would be worth roughly $3.2 billion.
And there's a larger context to all of this. At the behest of the Federal Reserve, the large derivatives dealers are planning a credit derivatives clearinghouse by year's end. The question here is whether that clearinghouse will be dominated by the dealers, the interdealer brokers or the exchanges eager to get into the credit derivatives games. The GFI-Tullett talks are probably part of larger pressures to consolidate. Perhaps the defection of the 20 staffers to Tradition is as well.
Now back to the specifics of the timing. If you search Google News for GFI Group, the Tullet Prebon talks dominate the results and buries the Tradition story. The Tullet stories also hardly mention GFI's legal case. Now certainly the fact that the Tullet talks story emerged on Thursday, a day after the Tradition decision story, does make you think that GFI had every self-interest to get the deal story out. No proof, of course. Just wondering. - Matthew Wurtzel
See story about Tullett Prebon talks from The Financial Times
See story about Tradition Asiel law suit from Crain's
