GO
Loading...

Enter multiple symbols separated by commas

Cantor to Combine eSpeed, BGC in $1.3 Billion Deal

Bond trader Cantor Fitzgerald is combining its electronic brokerage eSpeed, which has been a takeover target, with its BGC Partners inter-dealer broker into a new publicly listed company in a $1.3 billion (969 million euro) deal.

The deal is structured as a takeover of BGC by eSpeed , and the companies said on Wednesday that by acquiring BGC, eSpeed will be able to develop new products more effectively and benefit from a larger capital base.

"We believe that the combined company will generate greater revenue opportunities by applying technology to improve voice broker productivity, while accelerating the pipeline from voice to fully electronic trading," BGC Chief Executive Lee Amaitis said.

ESpeed will issue about 134 million shares of stock and rights, with its shares valued at $9.75 (7.27 euros) a share, a 6.1% premium to where they closed on Tuesday.

BGC will withdraw its initial public offering proposal as a result of the deal.

U.K.-based inter-dealer broker Tullett Prebon approached eSpeed about a possible takeover in April, but eSpeed and Cantor rejected the offer, angering some of eSpeed's activist investors.

Howard Lutnick, the chairman, CEO and president of eSpeed, will be chairman and co-CEO of the new company, which will be called BGC Partners, with Amaitis as his co-CEO.

The combined company's projected revenue for 2007 is about $1 billion, and expected to gain more than 12% in 2008. It is also expected to generate a pre-tax profit margin of about 13% and an effective tax rate of no higher than 27% after the effects of a net operating loss carry-forward.

Deutsche Bank and Cantor Fitzgerald advised BGC and Cantor while eSpeed's board was advised by Sandler O'Neill + Partners.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Trading Nation: Trading bonds now

    Discussing how to invest in the bond market and whether bond traders learned anything new from Janet Yellen's speech with Andrew Burkly, Oppenheimer, and Craig Johnson, Piper Jaffray.

  • Inside Facebook's new eco-friendly building

    CNBC's Julia Boorstin goes inside Facebook's newly opened, eco-friendly headquarters, which features a nine acre green roof, half-mile walking loop and 400 full-grown trees.

  • No laws violated in Hillary Clinton's e-mail scandal

    ISIS claims responsibility for Saudi Mosque bombing; an unexploded WWII bomb was found near Wembley Stadium in London; and U.S. issues corrective action order in California oil spill, reports CNBC's Sue Herera.