Lutnick Defends eSpeed Deal

Howard Lutnick has come under intense fire from activist investors over the past few months, but the Cantor Fitzgerald CEO tells TheStreet.com that plans to merge eSpeed (ESPD Quote) and forgo an initial public offering of BGC Partners is the right move.

"Activist shareholders come with the territory of being public, but what you try and do is drive value at the company and this transaction does that," he explained during a phone interview Wednesday evening.

Electronic trading platform eSpeed is expected to issue 133.9 million new shares valued at $1.22 billion to London-based BGC. The combined company will take on the BGC Partners name and, assuming completion of the deal, about 300 founding partners of BGC will leave Cantor and join the combined entity. Lutnick adds that those partners will take a roughly 19% stake in the interdealer broker entity.

The combined interdealer broker company is expected to have about $1.1 billion of revenue this year, he added.

"This is really an ideal structured fit," Lutnick said. "This is like a hand and glove. eSpeed is the technology that drives BGC's business already and BGC has been the driver of eSpeed's growth."

Although reports have suggested that shareholder activists factored into forcing eSpeed's hand, Lutnick said plans for merging BGC and eSpeed had been considered as far back as February. "eSpeed has watched BGC for some time," he commented. The Cantor chief says the companies operated with independence in deciding to merge.