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The New York Stock Exchange Sold For $8.2 Billion Dollars

In the latest attempt to consolidate the exchange industry, Intercontinental  Exchange  unveiled an $8.2  billion cash-and-stock deal on Thursday to land NYSE Euronext , the parent of the iconic New York  Stock Exchange.

If blessed by skeptical regulators, the transaction would end more than 200  years of independence for the Big Board, which has been struck by tumbling  trading volumes industry wide and a shift to so-called dark pools.

The tie-up values NYSE Euronext at $33.12 a share, representing a 37.7%  premium over the exchange operator’s closing price on Wednesday. Shareholders  have the option to receive either that amount in cash, 0.2581 of ICE shares for  each of their own or a mix of cash and stock.

With a limit of $2.7 billion of cash, the deal is weighted 67% equity and 33%  cash, continuing a rising pattern of acquiring companies favoring stock  deals.

While NYSE has one of the premier brands in the global financial system,  Atlanta-based ICE is a lesser known player in the industry focused on futures  trading and with a significant foothold in London.

Led by CEO Jeffrey Sprecher, ICE teamed up with Nasdaq OMX Group to make a joint bid for  NYSE Euronext for about $11 billion in April 2011, but that deal crumbled under  regulatory pressure.

NYSE instead stuck with a friendly deal to combine with Germany’s Deutsche  Borse, before that deal was ultimately scrapped by regulators due to antitrust  concerns as well.

ICE said it expects its new deal to close in the second half of 2013, but  noted it is subject to both shareholder and regulatory approval in the U.S. and  Europe.

The Securities and Exchange Commission, which must sign off on the deal,  declined to specifically comment on the news.

However, an SEC spokesman said: “As a general matter, the Commission’s  reviews of exchange mergers have focused on whether the combined entity’s rules  and governance structure promote regulatory compliance and effective SEC  oversight.”

The Department of Justice declined to comment on the NYSE-ICE deal.

NYSE shareholders applauded the announcement. NYSE’s stock soared as high as  $33.38 — surpassing the $33.12 offer price — but was trading more recently at  $31.73, up 31.89% on the day. ICE initially rallied on the news before  retreating, dropping 3.30% to $124.08 in recent action.

“Our transaction is responsive to the evolution of market infrastructure  today and 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, Sprecher said in a  statement.

While the low-profile Sprecher will stay on as chairman and CEO of the  combined company, Wall Street power player and NYSE CEO Duncan Niederauer will  take the lesser position of president and CEO of NYSE Group.

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,” Niederauer said. “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.”

The combined company will have huge influence in the financial markets, with  14 total exchanges and 5 clearinghouses.

If approved by regulators, the ICE/NYSE tie-up could raise pressure on other  exchange operators to consolidate, including the Nasdaq Stock Market and  Chicago-based CME Group.

The exchanges expect the tie-up will generate expense synergies of about $450  million in the second full year after closing. The deal is also forecasted to  boost earnings by at least 15% in the first full year.

ICE said it is committed to preserving the NYSE Euronext brand, saying it  plans to maintain the NYSE building, which is a symbol of American capitalism.  ICE plans to keep dual headquarters in New York and Atlanta as well as open a  new midtown Manhattan office in June 2013.

The companies said four members of the NYSE board will be added to ICE’s,  which will grow to 15 members.

ICE’s team of bankers was led by Morgan Stanley, while NYSE was advised by Perella  Weinberg Partners and BNP Paribas.

Source: Fox News 

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Posted by on December 20, 2012. Filed under NY News,Slider. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.