IntercontinentalExchange Inc (ICE.N) said on Tuesday it expects to close its takeover of NYSE Euronext NYX.N within days, and reported an 8 percent rise in third-quarter profit, helped by lower taxes and new clearing revenues.
The derivatives exchange and clearing house operator said in December it would buy the owner of the New York Stock Exchange in a deal worth $10.9 billion as of November 1. The deal will also give ICE control of Liffe, Europe's No. 2 derivatives market, and help it expand into the interest rate futures business.
The transaction had been expected to close on November 4, but ICE said on Wednesday that while there were no substantive issues remaining, certain European regulators needed more time to review the takeover.
"I hope it will be literally in a matter of days," Jeff Sprecher, ICE's chief executive, said on a call with analysts.
Once approved, ICE will move quickly to integrate the parts of NYSE it plans to keep, while unloading other parts of the business, Sprecher said, without identifying specific units.
"The nice thing about our merger is we have a much bigger scale and platform so that no one business is particularly material," Sprecher said. "It gives us license to take a look at them and say do we want to make a long-term play here or is it outside of our core competence and is it something that it may be better for others to invest in."
A CALL FOR CHANGE
Atlanta-based ICE was established in 2000 and grew quickly through a series of acquisitions. Sprecher has had a history of eliminating the trading floors of the exchanges his company has bought, but has vowed to keep open the floor of the New York Stock Exchange, which traces its origins back to an agreement signed under a buttonwood tree on Wall Street in 1792.
Sprecher has been critical of the way stock markets operate, and said he will continue to call for changes to the market structure, which he said gives incentives to brokers to act in ways not always in the best interests of the people they are trading for.
"We have equity exchanges so that companies like ICE that can start from nothing can attach to the capital markets to raise capital to build businesses, create jobs and be innovative and helpful to society," Sprecher said.
"I think the secondary market that takes advantage of people that have to trade or have poor information is not particularly warranted or helpful or sustainable."
ICE said it earned $141.3 million, or $1.92 a diluted share, in the third quarter, up from $131.1 million, or $1.79 a diluted share, a year earlier.
Shares of ICE were up 2.5 percent at $198.74 around midday.
Excluding costs related to the NYSE deal and other one-time items, ICE earned $1.97 per share, topping the average analyst estimate by 14 cents, according to Thomson Reuters I/B/E/S.
More than half of the earnings beat was due to lower taxes, with the remainder driven by "other revenues," including clearing services to Liffe Europe, said Diego Perfumo, an analyst at Equity Research Desk. Liffe Europe transferred the clearing of its derivatives contracts to ICE's clearing house from LCH.Clearnet in July.
Revenues were up 5 percent to $337.9 million, with market data revenues up 12 percent to $40.2 million. Revenue from ICE's credit default swap trade execution, processing and clearing business increased 15 percent to $38 million.
Earlier Tuesday, NYSE reported a 21 percent rise in third-quarter profit, helped by higher revenues at its cash listings business.
(Reporting by John McCrank in New York; Editing by Jeffrey Benkoe and Bob Burgdorfer)