Derek Tullett, a veteran City figure, yesterday sold his money broking firm to stock broker Collins Stewart in a £212m deal that values his stake at £15m.
Mr Tullett, a Labour party donor who was chairman of Tullett & Tokyo Liberty, will remain with the combined firm as an "ambassador".
The deal has been the subject of rumours for many months in the City which until last summer had thought Tulletts might float on the stock market.
Collins Stewart, run by chief executive Terry Smith who is best known in the City for his concerns about unusual accounting policies, is paying for Tulletts in shares through an intricately structured transaction.
Mr Smith said he remained "pretty bearish" about the stock market, which yesterday closed at its lowest level since December 1995.
He said that the purpose of the transaction was to diversify the revenue streams. "We are 95% equities and they are 95% non-equities," Mr Smith said.
There were no plans to make any job cuts, particularly as the operations will continue to be run separately.
A new name - yet to be decided - is to be given to the new group.
Tullet's chief executive, Bruce Collins, finance director Stephen Jack and non-executive David Clark are to join the board of the combined company.
Other investors in Tulletts include a subsidiary of one-time internet incubator NewMedia Spark, set up by Michael Whitaker, a founder of Collins Stewart. The Japanese financial firm Totan is also a shareholder as is the former Post Office pension fund, Hermes.
Mr Whitaker's NewMedia Spark had independently been in takeover talks with Collins Stewart, although the stockbroker admitted yesterday that those discussions had been put on ice while it was negotiating with Tulletts.
