GFI Group and Tullett Preston in Merger Talks

Tullet Prebon [TLPR.L] slipped 4.1% on Wednesday on concerns that talks with GFI (GFIG) could falter because of the recent weakness of sterling against the dollar. This will make the deal more expensive to pull off because it is likely to be structured as a Tullet purchase of GFI (say the Financial Ttimes).

If the increase in the amount of Tullet's stock that is out on loan is anything to go by, then short investors have held the same sentiment towards Terry Smith's inter-dealer broker, as the percentage of Tullet's Market Cap out on loan to short sellers (%MCOL) has risen from 3.8% to 5.2% since August 18th.

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Unsurprisingly, it is the opposite story with GFI, whose %MCOL decreased from 14% in mid-March to 2.26% on Thursday, which is in line with a recent price rise from $7 in July to $11.29 on Thursday. There are six days to cover and utilization is at 16.93%.

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Disclosure: None