After a process that apparently started three years ago, Icap has finally pulled off what might turn out to be the deal of the century with the purchase of EBS for a cash consideration of $775 million.
Barring any regulatory hiccups, Icap will finally get its hand on what is still the FX spot market’s predominant broker. Several market sources believe Icap has got a bargain, a fact underlined by an immediate 12% rise in Icap’s share price following the announcement. As Philip Middleton, an analyst at Merrill Lynch, wrote in a brief note after the deal was announced: “We believe that the strategic benefits of the deal are clear, as we have argued before, and the price looks very reasonable in the context of other exchange-like valuations.” The lack of alternative buyers – EBS’s 13 shareholders absolutely refused to entertain any approach from venture capitalists – means that Icap appears to have had a fairly free run at its target.
In a press statement announcing the deal, Michael Spencer, Icap’s chief executive, said: “We are very pleased to have reached agreement to acquire EBS. The company enjoys a strong market position in interdealer spot foreign exchange, with a very broad customer base.