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Thursday, December 20, 2012

ICE to buy NYSE Euronext for $8.2bn

The Punch - Nigeria's Most Widely Read Newspaper
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ICE to buy NYSE Euronext for $8.2bn
Dec 20th 2012, 23:00

Intercontinental Exchange struck an $8.2bn deal to buy NYSE Euronext, a combination that will propel the commodities market powerhouse into European financial futures but threaten to further reduce the clout of the New York Stock Exchange.

Reuters reported on Thursday, that the deal will create a new player in global derivatives trading and clearing that would take on CME Group Inc. While the New York Stock Exchange has stood for 200 years as an iconic symbol of US capitalism, it is almost an afterthought in this deal.

Atlanta-based ICE said it will try to spin off the Euronext European stock market businesses in a public offering, generating speculation it may eventually shutter the NYSE's trading floor, as well.

Profits from stock trading have been significantly eroded by new technology and the rise of private venues run by Wall Street banks and brokers.

Analysts said the deal will give ICE a strategic boost with control of Liffe, Europe's second-largest derivatives market, helping it compete against US-based CME Group, owner of the Chicago Board of Trade.

Derivatives trading remains quite profitable for the exchanges and new rules coming into play next year will dramatically expand the demand for clearing over-the-counter contracts.

Regulatory concerns sank two deals to buy NYSE Euronext last year, including a joint bid by ICE and Nasdaq OMX Group and a separate bid from German exchange Deutsche Bourse. But ICE alone has far less overlapping business and should face easy approvals, antitrust attorneys said.

The deal values each NYSE Euronext share at $33.12, a 28 per cent premium to the stock's closing price on Wednesday. Shareholders will have the option of accepting $33.12 in cash per NYSE Euronext share or 0.2581 ICE share.

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