This revelation surprised a lot of people on the Street who thought all the exchange horse trading of 2010-2011 was over. In 2011, for example, the Justice Department blocked ICE and NASDAQ's attempt to buy the NYSE. NYSE was also stopped from merging with Germany's Deutsche Borse.
Since 2010, $32 billion worth of attempted exchange merger/purchase deals have failed.
Here are the terms of the NYSE-Euronext ICE deal (form NYSE-Euronext):
Under the terms of the agreement, which
was unanimously approved by the Boards of both companies, the
transaction is currently valued at $33.12 per NYSE Euronext share, or a
total of approximately $8.2 billion, based on the closing price of ICE’s
stock on December 19, 2012. NYSE Euronext shareholders will have the
option to elect to receive consideration per NYSE Euronext share of (i)
$33.12 in cash, (ii) 0.2581 IntercontinentalExchange common shares or
(iii) a mix of $11.27 in cash plus 0.1703 ICE common shares, subject to a
maximum cash consideration of approximately $2.7 billion and a maximum
aggregate number of ICE common shares of approximately 42.5 million. The
overall mix of the $8.2 billion of merger consideration being paid by
ICE is approximately 67% shares and 33% cash. The transaction value of
$33.12 represents a 37.7% premium over NYSE Euronext’s closing share
price on December 19, 2012.
NYSE Euronext shareholders will own approximately 36% of ICE shares post-transaction.
It's all an attempt by exchanges to get bigger, more important
business in a world of declining trading commissions where big investors
(like mutual funds) are turning to private, dark pools to trade.For its part, NYSE-Euronext has seen its share of trading in stocks listed on the exchange fall from 82% to 21%, according to Bloomberg. And while it does own the largest exchanges by value of listings in the U.S., and parts of Europe, it needs to grow its share in a business that has become more important than trading simple stock and stock options — trading derivatives.
From January to September of this year, NYSE-Euronext made $357 million, down 32% from the same period last year.
That's where ICE comes in. It's a commodities futures exchange that especially focuses on energy futures. Since NYSE-Euronext doesn't have that business, the Justice Department may not consider this merger an anti-trust violation.
The trading of NYSE-Euronext stock were halted as the deal was being discussed, but before that it seemed like the market liked the idea of the ICE buying NYSE-Euronext as their shares were soaring.
Check out the press release below or check out NYSE's presentation on why this deal is a good thing:
IntercontinentalExchange to Acquire NYSE Euronext For $33.12 Per Share in Stock and Cash, Creating Premier Global Market Operator
- Supports transformative opportunities in clearing and market structure amid regulatory change;
- Dual headquarters in Atlanta and New York; will maintain iconic NYSE building ATLANTA and NEW YORK and PARIS, December 20, 2012 – IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, and NYSE Euronext (NYSE: NYX), the preeminent global equity, equity options and fixed income derivatives market operator, today announced a definitive agreement for ICE to acquire NYSE Euronext in a stock-and-cash transaction. The acquisition combines two leading exchange groups to create a premier global exchange operator diversified across markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates. With leading clearing capabilities, the combined company will be well positioned to deliver efficiencies while serving customer demand for clearing and risk management globally.
- Dual headquarters in Atlanta and New York; will maintain iconic NYSE building ATLANTA and NEW YORK and PARIS, December 20, 2012 – IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, and NYSE Euronext (NYSE: NYX), the preeminent global equity, equity options and fixed income derivatives market operator, today announced a definitive agreement for ICE to acquire NYSE Euronext in a stock-and-cash transaction. The acquisition combines two leading exchange groups to create a premier global exchange operator diversified across markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates. With leading clearing capabilities, the combined company will be well positioned to deliver efficiencies while serving customer demand for clearing and risk management globally.
Under the terms of the agreement, which
was unanimously approved by the Boards of both companies, the
transaction is currently valued at $33.12 per NYSE Euronext share, or a
total of approximately $8.2 billion, based on the closing price of ICE’s
stock on December 19, 2012. NYSE Euronext shareholders will have the
option to elect to receive consideration per NYSE Euronext share of (i)
$33.12 in cash, (ii) 0.2581 IntercontinentalExchange common shares or
(iii) a mix of $11.27 in cash plus 0.1703 ICE common shares, subject to a
maximum cash consideration of approximately $2.7 billion and a maximum
aggregate number of ICE common shares of approximately 42.5 million. The
overall mix of the $8.2 billion of merger consideration being paid by
ICE is approximately 67% shares and 33% cash. The transaction value of
$33.12 represents a 37.7% premium over NYSE Euronext’s closing share
price on December 19, 2012.
NYSE Euronext shareholders will own approximately 36% of ICE shares post-transaction.
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.
The majority of run-rate expense synergies of $450 million are expected to be achieved in the second full year post-closing.
Earnings accretion of greater than 15% is expected in the first year post-closing.
As a result of the transaction, ICE clearing will be more capital efficient and provide operational efficiencies for clearing members.
As a result of the transaction, ICE clearing will be more capital efficient and provide operational efficiencies for clearing members.
ICE is committed to preserving the NYSE
Euronext brand. ICE will maintain dual headquarters in Atlanta and New
York. New York headquarters will be located in the Wall Street building,
home to the iconic trading floor. ICE will also open a new midtown
Manhattan office in June 2013.
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.
ICE 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.
Jeffrey C. Sprecher will continue as Chairman and CEO of the combined company and Scott A. Hill as CFO. Duncan L. 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.
"Our transaction is responsive to the
evolution of market infrastructure today and offers a range of growth
opportunities, while enhancing competition in US 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 C. Sprecher. "We believe the combined company will be better
positioned to compete and serve customers across a broad range of asset
classes by uniting our global brands, expertise and infrastructure. With
a track record of growth and returns, clearing and M&A integration,
we are well positioned to transform our combined companies into a
premier global exchange operator that remains a leader in market
evolution."
“The Board of NYSE Euronext carefully
considered a range of strategic alternatives and concluded that ICE is
the ideal partner for NYSE Euronext in an evolving market landscape,"
said Jan-Michiel Hessels, Chairman of the Board of NYSE Euronext. "We
look forward to working with ICE to complete this compelling,
value-enhancing combination."
“This 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 L. 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.”
Benefits of the transaction include:
Financial Acquisition will unlock
significant value through the achievement of merger related cost
synergies. ICE has successfully integrated more than a dozen
acquisitions in the last decade, with a track record of delivering on or
exceeding synergy commitments.
The transaction is expected to be highly
accretive to earnings in the first year after closing and produce
returns on invested capital above the transaction’s cost of investment
beginning in year two.
Model delivers strong operating leverage
while preserving healthy levels of recurring revenues and participation
in a market recovery, positioned to perform well in a rising interest
rate and improved equity market environment.
Strong cash flows and balance sheet of
the combined company support continued investments in growth initiatives
while facilitating rapid deleveraging post-close. ICE, upon closing of
the transaction intends to adopt a dividend policy that will provide for
an annual dividend payment of approximately $300 million. This amount
represents the aggregate amount of NYSE Euronext’s current annual
dividend payment.
Provides for diversification among
multiple asset classes and expands ICE’s reach into new markets,
including the world’s largest asset class - interest rates - at current
cyclical lows.
Operational Acquisition creates an
unparalleled operator of global exchanges and clearing houses for
agricultural and energy commodities, credit derivatives, equities and
equity derivatives, foreign exchange and interest rates.
Benefits from strong global presence, infrastructure and brands across international markets.
NYSE Liffe execution and clearing will be
merged into ICE Clear Europe, creating an efficient clearing model
poised for growth as interest rate markets recover and interest rate
swap clearing develops.
ICE has proven transition capabilities
and successfully launched ICE Clear Europe in November 2008,
transferring approximately 26.5 million contracts and over $16 billion
in initial margin.
Competition and Market Structure Builds
on track record of improving market transparency and expands resources
to address challenges and opportunities in equity market structure.
Enhances innovation and competitiveness within U.S. and European rate markets.
Operational and capital efficiency in implementation of new regulatory requirements with compliant solutions already in place.
Enhances innovation and competitiveness within U.S. and European rate markets.
Operational and capital efficiency in implementation of new regulatory requirements with compliant solutions already in place.
Emphasis on market safety and security via high-performance, integrated technology infrastructure.
ICE’s lead financial advisor is Morgan Stanley; further financial advice is being provided by BMO Capital Markets Corp., Broadhaven Capital Partners, JPMorgan, Lazard, Societe Generale Corporate & Investment Banking, and Wells Fargo
Securities, LLC. ICE legal advisors are Sullivan & Cromwell LLP and
Shearman & Sterling LLP. The principal financial advisers to NYSE
Euronext are Perella Weinberg Partners and BNP Paribas.
Legal advisers to NYSE Euronext are Wachtell, Lipton, Rosen & Katz,
Slaughter & May, and Stibbe N.V. Further financial advice to NYSE
Euronext is being provided by Blackstone Advisory Partners, Citigroup, Goldman Sachs & Co. and Moelis & Co.
Investor Conference Call An investor
conference call will be held at 8:45 a.m. ET/1:45 p.m. GMT today,
December 20, 2012, and is available via the ICE and NYSE Euronext
websites. U.S. participants may dial 1 (866) 700-7441 and international
participants may dial +1
(617) 213-8839. The participant code is 20593477. The call will be
available for replay on each investor website. Media may participate in
the call on a listen-only basis.
ICE-CORP
About IntercontinentalExchange, Inc.
IntercontinentalExchange, Inc. (NYSE: ICE) is a leading operator of
regulated futures exchanges and over-the-counter markets for
agricultural, credit, currency, emissions, energy and equity index
contracts. ICE Futures Europe hosts trade in half of the world’s crude
and refined oil futures. ICE Futures U.S. and ICE Futures Canada list
agricultural, currencies and Russell Index markets. ICE is also a
leading operator of central clearing services for the futures and
over-the-counter markets, with five regulated clearing houses across
North America and Europe. ICE serves customers in more than 70
countries. For more information, please visit: www.theice.com.
The following are trademarks of
IntercontinentalExchange, Inc. and/or its affiliated companies:
IntercontinentalExchange; IntercontinentalExchange & Design; ICE;
ICE and block design; ICE Futures Canada; ICE Futures Europe; ICE
Futures U.S.; ICE Clear Credit; ICE Clear Europe; ICE Clear U.S.; ICE
Clear Canada; The Clearing Corporation; U.S. Dollar Index; ICE Link and
Creditex. All other trademarks are the property of their respective
owners. For more information regarding registered trademarks owned by
IntercontinentalExchange, Inc. and/or its affiliated companies, see
https://www.theice.com/terms.html.
About NYSE Euronext
NYSE Euronext (NYSE: NYX) is a leading
global operator of financial markets and provider of innovative trading
technologies. The company’s exchanges in Europe and the United States
trade equities, futures, options, fixed-income and exchange-traded
products. With approximately 8,000 listed issues (excluding European
Structured Products), NYSE Euronext’s equities markets – the New York
Stock Exchange, NYSE Euronext, NYSE MKT, NYSE Alternext and NYSE Arca –
represent one-third of the world’s equities trading, the most liquidity
of any global exchange group. NYSE Euronext also operates NYSE Liffe,
one of the leading European derivatives businesses and the world’s
second-largest derivatives business by value of trading. The company
offers comprehensive commercial technology, connectivity and market data
products and services through NYSE Technologies. NYSE Euronext is in
the S&P 500 index. For more information, please visit:
http://www.nyx.com.
Forward-Looking Statements
This press release may contain
“forward-looking statements” made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. In some cases,
you can identify forward-looking statements by words such as “may,”
“hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,”
“believe,” “estimate,” “predict,” “potential,” “continue,” “could,”
“future” or the negative of those terms or other words of similar
meaning. You should carefully read forward-looking statements, including
statements that contain these words, because they discuss our future
expectations or state other “forward-looking” information.
Forward-looking statements involve a number of risks and uncertainties.
ICE and NYSE Euronext caution readers that any forward-looking statement
is not a guarantee of future performance and that actual results could
differ materially from those contained in the forward-looking statement.
Such forward-looking statements include, but are not limited to,
statements about the benefits of the proposed merger involving ICE and
NYSE Euronext, including future financial results, ICE’s and NYSE
Euronext’s plans, objectives, expectations and intentions, the expected
timing of completion of the transaction and other statements that are
not historical facts. Important factors that could cause actual results
to differ materially from those indicated by such forward-looking
statements are set forth in ICE’s and NYSE Euronext’s filings with the
U.S. Securities and Exchange Commission (the “SEC”). These risks and
uncertainties include, without limitation, the following: the inability
to close the merger in a timely manner; the inability to complete the
merger due to the failure of NYSE Euronext stockholders to adopt the
merger agreement or the failure of ICE stockholders to approve the
issuance of ICE common stock in connection with the merger; the failure
to satisfy other conditions to completion of the merger, including
receipt of required regulatory and other approvals; the failure of the
proposed transaction to close for any other reason; the possibility that
any of the anticipated benefits of the proposed transaction will not be
realized; the risk that integration of NYSE Euronext’s operations with
those of ICE will be materially delayed or will be more costly or
difficult than expected; the challenges of integrating and retaining key
employees; the effect of the announcement of the transaction on ICE’s,
NYSE Euronext’s or the combined company’s respective business
relationships, operating results and business generally; the possibility
that the anticipated synergies and cost savings of the merger will not
be realized, or will not be realized within the expected time period;
the possibility that the merger may be more expensive to complete than
anticipated, including as a result of unexpected factors or events;
diversion of management’s attention from ongoing business operations and
opportunities; general competitive, economic, political and market
conditions and fluctuations; actions taken or conditions imposed by the
United States and foreign governments and regulatory authorities; and
adverse outcomes of pending or threatened litigation or government
investigations. In addition, you should carefully consider the risks and
uncertainties and other factors that may affect future results of the
combined company described in the section entitled “Risk Factors” in the
joint proxy statement/prospectus to be delivered to ICE’s and NYSE
Euronext’s respective shareholders, and in ICE’s and NYSE Euronext’s
respective filings with the SEC
that are available on the SEC’s web site located at www.sec.gov,
including the sections entitled “Risk Factors” in ICE’s Form 10−K for
the fiscal year ended December 31, 2011, as filed with the SEC on
February 8, 2012, and ICE's Quarterly Reports on Form 10-Q for the
quarters ended June 30, 2012, as filed with the SEC on August 1, 2012
and September 30, 2012, as filed with the SEC on November 5, 2012, and
“Risk Factors” in NYSE Euronext’s Form 10−K for the fiscal year ended
December 31, 2011, as filed with the SEC on February 29, 2012. You
should not place undue reliance on forward-looking statements, which
speak only as of the date of this press release. Except for any
obligations to disclose material information under the Federal
securities laws, ICE undertakes no obligation to publicly update any
forward-looking statements to reflect events or circumstances after the
date of this press release.
Important Information About the Proposed Transaction and Where to Find It:
In connection with the proposed
transaction, ICE intends to file with the SEC a registration statement
on Form S−4, which will include a joint proxy statement/prospectus with
respect to the proposed acquisition of NYSE Euronext. The final joint
proxy statement/prospectus will be delivered to the stockholders of ICE
and NYSE Euronext. Investors and security holders of both ICE and NYSE
Euronext are urged to read the joint proxy statement/prospectus
regarding the proposed transaction carefully and in its entirety,
including any documents previously filed with the SEC and incorporated
by reference into the joint proxy statement/prospectus, when it becomes
available because it will contain important information regarding ICE,
NYSE Euronext and the proposed merger. Investors will be able to obtain a
free copy of the joint proxy statement/prospectus, as well as other
filings containing information about ICE and NYSE Euronext, without
charge, at the SEC’s website at http://www.sec.gov/. Investors may also
obtain these documents, without charge, from ICE’s website at
http://www.theice.com.
Participants in the Merger Solicitation:
ICE, NYSE Euronext and their respective
directors, executive officers and other members of management and
employees may be deemed to be participants in the solicitation of
proxies in respect of the transactions contemplated by the merger
agreement.
You can find information about ICE and
ICE’s directors and executive officers in ICE’s Annual Report on Form
10-K for the year ended December 31, 2011, as filed with the SEC on
February 8, 2012, and ICE’s proxy statement for its 2012 annual meeting
of stockholders, as filed with the SEC on March 30, 2012.
You can find information about NYSE
Euronext and NYSE Euronext’s directors and executive officers in NYSE
Euronext’s Annual Report on Form 10-K for the year ended December 31,
2011, as filed with the SEC on February 29, 2012, and NYSE Euronext’s
proxy statement for its 2012 annual meeting of stockholders, filed with
the SEC on March 26, 2012.
Additional information about the
interests of potential participants will be included in the joint proxy
statement/prospectuses, if and when it becomes available, and the other
relevant documents filed by ICE and NYSE Euronext with the SEC.
This announcement does not constitute an offer or any solicitation of any offer, to buy or subscribe for any securities.
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