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Tradeweb (TW) Makes a Deal to Acquire Yieldbroker for A$125M

Tradeweb Markets Inc. TW, a leading global operator of electronic marketplaces and money markets, entered into a definitive agreement to acquire Yieldbroker, a prominent Australian trading platform, in an all-cash transaction of A$125 million. Closing of the deal, which is subject to customary conditions and regulatory reviews, is expected by the end of this year.

As on date, Yieldbroker facilitates trading of approximately A$6 trillion annually. It is a platform for trading Australian and New Zealand government bonds and interest rate derivatives. It provides an institutional and wholesale marketplace (dealer to customer and dealer to dealer) to the domestic customers in Australian and New Zealand debt securities.

The transaction will facilitate a more liquid, transparent and efficient fixed income markets by bringing together innovative trading solutions and deep industry experience of both companies. Hence, the acquisition aligns with Tradeweb’s mission to make markets more efficient.

The acquisition will also be useful to the Australian institutions, including superannuation (employer-sponsored retirement account) funds. They will enjoy enhanced access to Tradeweb’s liquid, global, multi-asset platform.

Tradeweb’s international client base will be able to seamlessly tap into Yieldbroker’s Australian and New Zealand bond and derivative marketplaces, as well as the firm’s reliable pre-trade pricing data offering. Hence, TW’s efforts to provide greater engagement and connectivity in the international markets to its customers through this acquisition is a strategic fit.

Tradeweb CEO Billy Hult added, “This is an exciting opportunity for Tradeweb to better serve the participants of a highly attractive and fast-growing fixed income market.”

TW has expanded its offering through strategic acquisitions, thereby enhancing its platforms. In 2021, it completed the acquisition of Nasdaq’s U.S. fixed income electronic trading platform, formerly known as eSpeed. Its fully executable central limit order book for on-the-run U.S. treasuries became a part of Tradeweb’s Dealerweb unit, which is serving the wholesale U.S. treasury market.

However, amid the challenging operating backdrop and hovering recession fears, Tradeweb’s transaction fees and commissions are likely to remain under pressure. Expanding its operations through acquisitions, TW has made efforts to ensure top-line growth amid expectations of economic slowdowns.

Over the past six months, shares of TW have gained 17.8% against the industry’s decline of 18.1%.

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Currently, TW carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Expansion Effort by Another Stock in the Finance Sector

Amid a challenging operating backdrop due to expectations of economic slowdown, banks are undertaking expansion moves through acquisitions. Recently, LCNB Corp. LCNB entered into an agreement to acquire Cincinnati Bancorp, Inc. CNNB in a stock-and-cash transaction. Closing of the deal, which is subject to regulatory approval, CNNB shareholder approval and other customary conditions, is expected in the fourth quarter of 2023. The approval of LCNB shareholders is not required.

The deal is expected to significantly increase LCNB’s existing presence in the Cincinnati market and expand its community banking franchise across the Ohio River into the compelling Northern Kentucky market. Excluding one-time transaction costs, LCNB expects the transaction to be 18.2% and 26.2% accretive to 2024 and 2025 earnings per share, respectively.


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