Terry Smith, the head of Tullett Prebon, has lashed out at the rival Cantor Fitzgerald for rejecting his 302 million bid for a spin-off company, reigniting a vicious feud between the men who control the world of interdealer broking.
Smith attacked eSpeed, the electronic trading network controlled by Cantor, for rejecting his overtures for the second time in two years and accused the company of ignoring the interests of minority shareholders.
It is hard to find a feud as deep and vituperative as that between three of the wealthiest men in the City: Terry Smith, Howard Lutnick, the head of Cantor Fitzgerald, and Michael Spencer, the chief of Icap, another interdealer broker (IDB).
While interdealer broking – the business of over-the-counter trades in bonds and derivatives between banks and hedge funds – is rather dry, the feuding and backbiting between the brokers is far more colorful, as is their lifestyle.
In the world of IDBs, there are stories of personal threats, foul-mouthed tirades across trading floors and wild evenings out. One broker at Cantor Fitzgerald famously told a court that most nights he would drink eight bottles of lager and ten shots of vodka, as well as snorting four grams of cocaine a week.
The level of personal enmity between Smith, Lutnick and Spencer and their respective firms all too often spills out into the public domain.
This time round, the row is between Smith and Lutnick. Smith insisted yesterday that his bid for eSpeed was in the best interests of all shareholders.
“It would unlock shareholder value that is now unavailable to the minority shareholders,” he said.
Tullet Prebon has offered $12 a share for eSpeed, which was floated on Nasdaq in 1999 but where Cantor and Lutnick retain 88 percent of the voting rights through controversial class B shares.
Smith pointed out that eSpeed’s shares have been flat since the initial rejection two years ago, while Tullett’s have risen 47 percent. He claimed that some of the major dealer clients of eSpeed would prefer its platform to be owned and operated by Tullett Prebon.
He added: “We would high-light the fact that eSpeed’s board has not deemed it necessary to consult with any interested party other than Cantor in reaching this decision.”
Buying eSpeed would accelerate Tullett Prebon’s move into electronic broking.
Shares in eSpeed gained 8 percent to $10.45 on Tullett’s announcement. Tullett Prebon closed down 9p at 515p, a fall of nearly 2 percent. Cantor Fitzgerald declined to comment.