Price is not right as Cenkos ends takeover talks with JM Finn

City brokerage fails in buy-out attempt as City faces exodus of firms from the Square Mile
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The Independent Online

Cenkos, the listed City brokerage, is believed to have ended talks to buy JM Finn, the independent broking and fund management group.

It's thought that Cenkos, which has failed in its attempts to buy Close Brothers and Arden partners in the past three years, had been in discussions to buy JM Finn. However, the management at JM Finn balked at the price being offered by Cenkos and ended the talks between the two firms.

According to JM Finn's latest set of accounts filed at Companies House, it posted a pre-tax profit for the year to the end of April 2009 of £1.42m on income of nearly £40m.

The brokerage was founded in 1945 and incorporated as a private limited company in 2006. It has offices in London, Bristol, Leeds, Bury St Edmunds and Ipswich and employs more than 300 people. The group is chaired by James Edgedale who joined the firm in 2004 from university.

JM Finn is owned by its directors and employees. The firm also owns a sizeable stake in the corporate finance firm FinnCap, which is chaired by Jon Moulton, the private equity veteran.

Recent City rumours suggested that Cenkos, which was founded by Andy Stewart, was looking to snap up the broker Oriel Securities. However, such reports were described as "utter rubbish" by sources close to both firms.

Spokesmen for both Cenkos and JM Finn declined to comment.

Meanwhile, it's believed that a number of City brokers, including Cenkos, could quit London for the Channel Islands over concerns about the growing tax burden in the UK. A source close to Cenkos said the firm could incorporate its operations in the Channel Islands but any decision would be delayed until after the general election.

It's believed that Close Brothers is looking at ways to move the operations of Winterflood Securities, the market-making business chaired by Brian Winterflood, to one of the Channel Islands, possibly Guernsey.

Earlier this month, the broker Shore Capital, which was recently appointed by West Ham United's new owners to tackle the east London football club's debt mountain, revealed plans to quit Great Britain for a Guernsey retreat. It's thought that Shore and other firms are seeking new homes because of the way the UK revenue authorities tax any profits made and taxed in foreign jurisdictions.

Many City firms have also looked at quitting the Square Mile over the implementation of a 50 per cent top rate of income tax.

News of possible City exits comes as the broking sector braces itself for a long-anticipated wave of consolidation. Prebon Tullett, the City interdealer broker run by tycoon Terry Smith, is currently in takeover negotiations with an unnamed party.

Tullett won its long running battle with rival BCG Partners over staff poaching last week.