Collins placing funds Prebon deal

COLLINS Stewart Tullett today launched a £48m placing to help pay for the £125m acquisition of rival inter-dealer broker Prebon. T

he market cheered the deal with a 20p rise in the shares to 380p, well clear of the 350p placing price.

Collins also reported a 12% rise in underlying pre-tax profits to £39.4m for the six months to June.

The Prebon acquisition will consolidate Collin's second-place ranking in inter-dealer broking, behind ICAP, the world's biggest player.

The deal will take Collins a further step away from its origins as a London-based stockbroker and further diversify its earnings away from equities.

The firm expects to get £60m in cost savings by combining Prebon with its Tullet inter-dealer broking business, which will involve a restructuring cost of £80m.

'We are anticipating making some significant cost savings,' chief executive Terry Smith said. He said this would mean some job cuts, but did not give further details.

Collins plans to set up a single IT and communication system for the Prebon/Tullet business and said it would close 'relatively underperforming desks' within both firms and remove overlap in management and support staff.

Prebon has about 1,650 staff and 23 offices around the world.