ICE hires banks to advise on flotation of NYSE's Euronext: sources

LONDON Wed Aug 21, 2013 11:55am EDT

Traders work on the floor of the New York Stock Exchange in New York December 20, 2012. REUTERS/Andrew Kelly

Traders work on the floor of the New York Stock Exchange in New York December 20, 2012.

Credit: Reuters/Andrew Kelly

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LONDON (Reuters) - IntercontinentalExchange (ICE.N) (ICE) has hired three banks to advise on the listing of Euronext, whose sale is crucial to its $8.2 billion takeover of NYSE Euronext NYX.N, three sources familiar with the situation said.

ABN Amro and existing advisers on the ICE/NYSE deal, Societe Generale (SOGN.PA) and JP Morgan (JPM.N), will act as global coordinators on the flotation of the combined Paris, Lisbon, Brussels and Amsterdam exchanges, the sources said.

ICE decided to float Euronext when it sealed a deal with NYSE Euronext last year in order to fund the transaction, to ease regulatory approval in Europe and to keep the combined group's focus on U.S. operations, one of the people said. ICE will however keep NYSE's Liffe interest rate futures exchange.

The U.S.-based exchange operator is planning to float about 50 percent of Euronext in Paris in the second half of next year and will retain about 30 percent, one of the sources said.

While an initial public listing (IPO) remains the most likely route, Euronext may also combine part or all of its activities with European rivals such as Germany's Deutsche Borse (DB1Gn.DE) or the Russian (MOEX.MM), Polish GPW.WA or Austrian stock exchanges, two of the people said.

"ICE and NYSE will listen to propositions," said one source, who asked not to be named because the talks are private.

Another of the three sources said that the IPO could be "pre-empted with a good offer".

"They've had a few discussions with possible buyers so far," he said.

OPEN GAME

Bankers expect further sector consolidation in the coming months as exchanges try to boost revenues by diversifying products and buying into settlement and clearing operations.

"It's very clear that sector consolidation is not over yet. Europe is pretty busy at the moment but you could see intra-consolidation in Eastern Europe, Asia and cross-border deals to combine geographies too," the third source said.

"The game is pretty open," he said.

Deutsche Borse may try to buy into Euronext's cash equities operation to diversify from its core derivatives business, two of the sources said, although another source close to the German exchange told Reuters that that was not an area where it was looking for acquisitions.

U.S. rival Nasdaq (NDAQ.O) and London's LSE (LSE.L) are also among the interested parties, all three sources said, although the EU's regulator may block a non-European sale, one said.

Deutsche Boerse is under the most pressure to act and, while a tie-up with its larger peer in Hong Kong would mean selling out, it could buy the Singapore stock exchange, he said, although it would be hard to create synergies across continents.

Deutsche Boerse's diversification strategy centers on expanding post-trade services such as clearing, the same source said.

Asian stock exchanges such as Singapore, Seoul or Hong Kong could also be targets for Nasdaq or the Tokyo and Shanghai exchanges, a separate source said.

Nasdaq is also looking to expand in the Middle East and may be interested in operators such as Dubai stock exchange, the same person said.

Euronext, JP Morgan, Deutsche Borse all declined to comment, while other parties were not immediately available for comment.

(Additional reporting by Christian Plumb, Alexandre Bokenbaum-Granier in Paris and Ed Taylor in Frankfurt; Editing by Louise Ireland)

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