NEW YORK -- The owner of the venerable New York
Stock Exchange, best known for its stock-related trading business and
famous trading floor, has been acquired by the InterContintenalExchange,
or ICE, an upstart exchange with a huge commodities and derivatives
The deal is valued at $8.2 billion. The
combination creates a more diversified financial exchange company, which
includes trading of agricultural and energy commodities, credit
derivatives, stocks and equity derivatives, foreign exchange and
The announcement came Thursday about an hour before the start of trading in New York.
a statement announcing the deal, ICE said it is committed to preserving
the NYSE Euronext brand and the newly combined company will maintain
dual headquarters in Atlanta and New York. New York headquarters will be
located in the Wall Street building that is home to the iconic trading
ICE will acquire NYSE Euronext for $33.12 per share in cash
and stock, a 37.7% premium to Wednesday's closing price. NYSE
shareholders can elect to be paid in all cash, all stock or a
combination of $11.27 in cash plus stock in ICE.
THE PRESS RELEASE: Details of the deal
transaction leverages the strength of our iconic brand and the value we
have created in our global equity and derivatives franchises -
positioning the business for solid long-term growth and development,"
said Duncan Niederauer, CEO of NYSE Euronext. "We are bringing together
two highly complementary businesses, creating an end-to-end multi-asset
portfolio that will be strongly positioned to serve a global client base
and capture current and future growth opportunities."
attraction for ICE is not NYSE Euronext's stock trading business --
which has been in decline since the 2009 financial crisis and the
industry shift to electronic stock trading. ICE is targeting NYSE's
LIFFE derivative exchange, which is based in London and will enable ICE
to gain access to Europe's sought-after derivatives business, RBC Europe
analyst Peter Lenardos said in a research note.
of ICE and NYSE Euronext will also allow the new exchange giant to
better compete with CME Group, a U.S. exchange with a huge derivatives
business that owns the Chicago Mercantile Exchange and Chicago Board of
The deal will also allow the combined entity to reduce its
costs in an industry that has been hurt by reduced trading volumes and
increased regulatory obstacles.
"Our transaction ... offers a
range of growth opportunities, while enhancing competition in U.S. and
European markets and broadening our ability to address new markets and
offer innovative products and services on a global platform," said ICE
Chairman and CEO Jeffrey Sprecher.
It marks the latest move
towards industry consolidation, driven largely by reduced trading
volumes, intense competition and overcapacity.
Lenardos says the
merger sets the stage for the potential break-up of NYSE Euronext, which
had a pre-deal value of $5.8 billion. "We believe that ICE will have
little use for NYSE Euronext's equities business," which includes stock
exchanges in Paris, Amsterdam, London and Brussels, Lenardos said.
deal values NYSE Euronext at 13.2 times next year's earnings estimates,
says Lenardos. "We believe this price is very generous to NYX
shareholders, and that $10 billion (including debt) is a steep price for
ICE to gain meaningful access to European derivatives." Nonetheless, he
expects initial reaction to the deal will be positive.
and NYSE Euronext businesses have no significant business overlap,
analysts do not foresee anti-trust risk to this deal. The latest deal
could also jump-start "mega-mergers" in an industry where the top
players are "keen to consolidate," Lenardos says.
More than a year
ago, ICE and Nasdaq OMX Group teamed up for a hostile takeover of NYSE
Euronext, but the deal was blocked by the U.S. government on anti-trust
concerns. The Justice Department feared the Nasdaq and NYSE would have a
stock trading monopoly in the U.S.
Similarly, European regulators balked at a proposed alliance between NYSE Euronext and Deutsche Bourse.
* The cash portion of the transaction will be funded by a combination of cash on hand and existing ICE credit facilities.
The transaction is expected to close in the second half 2013, subject
to regulatory approvals in Europe and the U.S. and approval by
shareholders of both companies.
As a result of the transaction,
ICE clearing will be more capital efficient and provide operational
efficiencies for clearing members, the statement said.
ICE is also
committed to maintaining the position of NYSE Liffe in London as a
leading international market operator for derivatives products,
including its benchmark interest rate complex.
It intends to
explore an initial public offering of Euronext as a Continental
European-based entity following the closing of the acquisition if market
conditions and European policy makers support the offering.
Sprecher will continue as Chairman and CEO of the combined company and
Scott Hill as CFO. Duncan Niederauer will be President of the combined
company and CEO of NYSE Group. Four members of the NYSE Euronext Board
of Directors will be added to the ICE Board of Directors which will be
expanded to 15 members.