Will Cantor Fitz and Reuters Team Up To Invest In Bridge Information Systems?

Speculation about prospective buyers of Bridge Information Systems Inc. continues to swirl: The latest and hottest rumor now has Cantor Fitzgerald L.P. teaming up with Reuters to make a pitch to purchase the vendor. Bridge, which has drawn the eyes of ADP (IMT, Sept. 30) and Dow Jones Telerate (IMT, Dec. 9) in recent weeks, has heard Cantor and Reuters come knocking on its door before--but one source following the Bridge negotiations says that the interdealer-broker and market data vendor have, for the first time, made a joint house call to Alex. Brown Inc., the Baltimore-based investment banker that is handling Bridge's search for potential investors. At the same time, a new player appears to have emerged in the bidding for Bridge: Welsh Carson Anderson & Stowe, a New York-based investment management firm with some $2 billion in assets under management.

According to the source, Cantor--via its Market Data Corp. affiliate--and Reuters would like to acquire Bridge in an attempt to build an "institutional investor workstation" that could compete with the likes of Bloomberg L.P.'s fixed-income and analytics product. "The system [Cantor and Reuters would build via Bridge] would have both equity transaction capability [and] fixed-income transaction capability," the source says. "[Buying Bridge] would allow Cantor to get more in the information business, which is what they want. It would allow Reuters to get into the buy-side, which is what they want.... So I think it's something they would certainly consider very strongly."

The source adds that the acquisition of Bridge would also give Cantor and Reuters a "great" equity database to work with--a database that could help give Cantor the equity presence it desires. "Cantor has been for a while trying to build an equity presence for their brokerage business. And Bridge's own capability in the equities area certainly would allow Cantor to build a very strong equity brokerage business," the source says. A Cantor official refers a call for comment to a company spokesperson; the spokesperson did not return calls seeking comment.

Meanwhile, details about Welsh Carson Anderson & Stowe's interest in Bridge remain sketchy. The source says that the firm, which owns a 51 percent stake in interdealer-broker Euro Brokers Investment Corp. and a majority share in Seer Technologies Inc., has talked with Alex. Brown about Bridge. A Welsh Carson official did not return a call seeking comment.

For Bridge, striking a joint deal with Cantor and Reuters would give the vendor an immediate presence in the fixed-income marketplace--a marketplace it has long been looking to penetrate. The source says that the combination of Cantor and Reuters as a parent would provide Bridge with the ability to develop a fixed-income transaction system. "Bridge has a tremendous presence on buy-side equities. [But] for them to truly make the next move, they have to add fixed-income [data]," the source says.

A source at Bridge says that although he has not heard the Cantor/Reuters speculation, it is an "interesting" concept. Says he: "I've heard that concept before, but haven't heard those names in combination before.... [But] certainly, strategically, Bridge [sees] fixed-income as the direction we'd like to go in long-term."

What's more, another market data industry source says that the Cantor/Reuters "rumor" makes more sense than any other Bridge speculation he has heard to date. "Cantor could take over Bridge trading and Reuters could take over Bridge data," the source says.

If Cantor and Reuters were to team up to buy Bridge, it would not be the first time the vendors have gotten cozy. Cantor--whose exclusive U.S. Treasury prices have formed the core of Telerate's data services for years--signed a long-term exclusive agreement with Reuters for the IDB's non-U.S. Treasury data in January 1993 (Inside Market Data, Feb. 1, 1993).

Though it's unlikely to shape up in just this way, Telerate and Cantor--via its partnership with Reuters--could now conceivable end up going head-to-head in a battle to snatch up Bridge. Still, the source following the Bridge negotiations says that the Cantor/Reuters alliance and Telerate are now the two strongest contenders in the Bridge bidding war.

This source adds that Alex. Brown has already gone through the "first round of talks" concerning Bridge. He says that interested parties got into the "second round" of Bridge negotiations with bids "up to" $100 million--bids which, the source asserts, Alex. Brown found somewhat unsatisfactory: In a previous edition of IMT (IMT, Dec. 9), a source close to Bridge said the vendor was seeking in excess of $125 million for the company.