UPDATE 3-Tullett suitor walks away, shares slide

* Revenue down 12 pct to 312 mln stg in four months to April

* Run rate down 3 pct, defections cut revenue by 6 pct

* Shares down 12 pct

(Adds broker comments, background, updates shares)

By Jane Baird

LONDON, May 13 (BestGrowthStock) – British interdealer broker
Tullett Prebon (TLPR.L: ) said talks with a possible buyer had
ended with no offer for the company, sending its shares down
12.3 percent on Thursday.

This is the third time in five years that a company headed
by Terry Smith, chief executive of Tullett, has announced bid
approaches by unidentified parties that have come to nothing.

The world’s second-biggest interdealer broker had said in
early March it was in talks that might lead to an offer,
boosting its shares nearly 26 percent that day. That potential
suitor has not been identified. [ID:nLDE6290MY]

“These discussions have been constructive, however, it has
not been possible to reach agreement on the terms of any offer,”
the company said in a statement.

Tullett’s shares traded at 318.2 pence at 0806 GMT, which
compared with a close of 390 pence on the day it announced the
talks.

Predecessor firm Collins Stewart Tullett in August 2005 said
it had received a number of approaches. UK Broker Collins
Stewart, which split from Tullett in 2006 and from which Smith
recently stepped down as chairman, announced a preliminary
approach in August 2008.

Tullett, which acts as a middleman in over-the-counter
transactions between banks, also said revenue was down 12
percent to 312 million pounds ($464.1 million) for the four
months to April from a year ago, which was an exceptionally
volatile period in the markets.

Volatility boosts trading volumes and drives growth in the
interdealer broking business.

The underlying revenue run rate for the four months was down
3 percent, while broker defections reduced revenue by 6 percent
and the figure included an adverse impact from currency
movements, Tullett said.

Analysts at Oriel Securities said they had suspected bid
talks would be terminated, but they maintained a buy
recommendation despite expected weakness on Thursday.

“The outlook for the year should improve as Tullett is
actively replacing the brokers who left last year, and the
comparatives with the second half of 2009 are likely to be more
favourable,” they said.

Analysts forecast that Tullett’s revenues will drop by
around 5 percent this year to 900.6 million pounds and adjusted
earnings per share by 13.5 percent to 42.56 pence, according to
Thomson Reuters I/B/E/S/ Estimates.

But Terry Smith said in March Tullett could perform better
than expected because of a potential for another financial
crisis, which could originate in sovereign debt.[ID:nLDE62705U]

Tullett won a UK court case in March against rival BGC
Partners (BGCP.O: ), which was found to have joined in a
conspiracy with former senior employees to poach its brokers.
[ID:nLDE62H1FY]

It will take another 12 months for any damages to be
determined, while the company continues to pursue legal action
in the United States and against former employees in Hong Kong,
it said.

Investment Research

(Editing by Hans Peters and Erica Billingham)

UPDATE 3-Tullett suitor walks away, shares slide