ICE and NYSE Euronext: An Endeavor Across Asset Classes
Report Summary
ICE and NYSE Euronext: An Endeavor Across Asset Classes
Regulatory and shareholder approval holds the key to consolidation in the global derivatives trading market.
Boston, April 16, 2013 – Research from Aite Group today examines the proposed acquisition of NYSE Euronext by the Intercontinental Exchange (ICE) in a deal valued at US$8.2 billion.
While market optimism regarding the viability of large-scale exchange mergers has diminished after several high-profile consolidation failures, news of this offer is rejuvenating speculation about changes in the derivatives industry. Both exchanges boast wide-ranging market share and plentiful technological capabilities and have evolved as market leaders after rich histories of mergers and acquisitions. Pending regulatory and shareholder approval, the new entity will create a behemoth within the European derivatives markets.
ICE's purchase offer for NYSE Euronext, approved by the boards of both companies, represents a total value of US$8.2 billion, one-third of which would be cash remuneration and two-thirds to be paid in shares. At an aggregate value of US$33.12 per share of the company (NYSE:NYX), the bid includes a 37.7% premium over the pre-announcement closing price. After the transaction is completed, former shareholders of NYSE Euronext will own 36% of ICE shares.
ICE expects significant value creation from the merged entity, which would be expected in order to justify the significant premium of the offer price. Aite Group does not anticipate regulatory approval to be an issue, but shareholder approval could still affect the deal.
“There is a strong possibility that ICE may offer the Euronext division as an initial public offering; however, other exchanges may express interest in purchasing Euronext privately. This includes Spanish exchange group BME, which is considering exploring the move,” says Danielle Tierney, analyst at Aite Group.
This 26-page Impact Note contains five figures and three tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.