TP ICAP PLC (LON:TCAP) said Friday it has purchased US energy broker Axiom Commodity Group for an initial US$15.1mln, with the UK interdealer broker adding that it posted 1% revenue growth in the four months to October.
The FTSE 250 firm said Axiom will become part of TP ICAP's Energy & Commodities unit, providing pre-trade and market information and brokerage services to its clients.
READ: TP ICAP in advanced talks to buy US energy broker Axiom Commodity Group
In addition to the US$15.1mln in cash paid for Axiom, TP ICAP said a deferred, non-contingent consideration of US$3.1mln will be paid over three years, and a further $10.9mln of deferred contingent consideration may be payable depending upon how the business performs over the same period. The subsequent payments would be made in cash.
Nicolas Breteau, TP ICAP’s chief executive, said: “The purchase of Axiom, which has 22 brokers and specialises in crude oil, refined oil products, ethanol and physical grains, continues the expansion of our Energy & Commodities division and reinforces our existing presence in Houston, Texas.”
All of Axiom’s founding partners and senior management will remain with the business after the sale.
Earlier this week, the Financial Times reported that TP ICAP and Axiom had been talking for several weeks about a potential buyout of Axiom.
Trading update
Separately, TP ICAP said revenue in the four months to October rose 1% to £568mln from £562mln in the same period a year ago and was 1% higher at constant exchange rates. Revenue growth “reflects mixed market conditions during the period,” the company said.
Energy & Commodities revenue was in line with the prior-year period, and 2% lower year-to-date on a constant currency basis, with market conditions “remaining challenging” across the majority of TP ICAP’s Energy & Commodities products.
Global Broking revenue in the four months to 31 October was in line with the prior year, and 3% higher year-to-date on a constant currency basis with both Rates and Equities performing well, it said. The Data & Analytics business posted 11% revenue growth in the four months to October, and Institutional Services revenue increased 12%.
TP ICAP’s revenue year-to-date declined 1% to £1.478bln from £1.487bln a year ago but was 3% higher at constant exchange rates.
Breteau said: "Today's trading update demonstrates that TP ICAP is well placed to grow in mixed market conditions, characterised by periodic volatility that we saw in October following the US Federal Reserve's rates decision.”
He added: “This underlines our firmly-held belief that investing in growth areas such as Data & Analytics will benefit TP ICAP over the longer-term as we develop solid and scalable revenues across our global businesses.”
The company foresees its full-year performance to be in line with its guidance.