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EBS proves a steal of a deal for Icap

One old board member promised to tell me “all the sordid details.”

If there was ever any doubt that Icap got a bargain when it bought EBS last June, there shouldn’t be now. Icap released its preliminary results for the year ended March 31, 2007 this week. I don’t think I have ever seen a report that trumpeted the impact of an acquisition so much.

It started on the very first page. “Last year’s acquisition of EBS has proved an outstanding success,” it said. That set the tone for what was to follow. “The most important event in the electronic division was the acquisition in June 2006 of EBS for $534 million in cash and 36.1mln shares. This significantly increased our foreign exchange revenues. The integration is going well, having delivered its pre-acquisition targets. Now that we have had the opportunity to examine more deeply the potential technology savings, we have identified further synergies and the anticipated annual cost savings by 2008/09 are now expected to be $58mln,” it continued.

EBS, which ultimately cost Icap $856.6mln, accounted for nearly half of the revenues of Icap’s electronic broking division. “In the period from acquisition to March 31, 2007, EBS contributed £99.8mln to revenue and £30.8mln to pre-tax profit (before amortization of intangibles arising on consolidation and exceptional items).

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