| NEW YORK/LONDON
NEW YORK/LONDON Dec 20 IntercontinentalExchange
is in talks to buy New York Stock Exchange owner NYSE Euronext,
in a multi-billion dollar deal designed to push it into the big
league of European derivatives and take on arch rival CME Group.
ICE may consider a spin-off or sale of NYSE's stock
markets, a source told Reuters. As well as the 200-year old New
York exchange, the NYSE also owns bourses in Paris, Amsterdam,
Brussels and Lisbon.
"We can't exclude any option at this stage. It's all down to
what regulators will require to get the deal approved, and to
the timeframe they will give ICE to meet these targets," a
source familiar with the situation told Reuters, adding that a
deal was expected to be announced later on Thursday.
ICE has proposed buying NYSE, which also owns
derivatives market Liffe, for $33 per share, a 37 percent
premium to its Wednesday closing price, CNBC said.
One-third of the deal would be funded by cash and the rest
in stock, the source confirmed.
NYSE and ICE representatives declined to comment.
Analysts said a deal would give Atlanta-based ICE a
strategic boost with control of Liffe, Europe's second-largest
derivatives market, helping it compete against U.S.-based CME
Group Inc, owner of the Chicago Board of Trade.
"ICE is after Liffe, that is the crown jewel of NYSE
Euronext. ICE could potentially sell the US and European
equities business, but could struggle to find a buyer. A
spin-off of this business could be more likely," said Peter
Lenardos, analyst at RBC Capital Markets.
"Strategically it makes sense for ICE to enter the European
derivatives space in a meaningful way, but paying $10 billion -
with debt - to do so sounds generous for NYSE shareholders and
expensive for ICE shareholders.
At the close of trading on Wednesday, NYSE was worth about
$5.8 billion, indicating that ICE may be willing to pay roughly
$8 billion for the owner of the world's largest stock market.
NYSE shares jumped 12 percent in after-hours trading to
$26.96. ICE shares rose 3.1 percent to $132.32.
An ICE-NYSE Euronext tie-up would leap-frog Deutsche Boerse
to become the world's third-largest exchange group
with a combined market value of $15.2 billion. CME Group, ICE's
largest U.S.-based rival, has a market value of $17.5 billion,
Thomson Reuters data shows.
Hong Kong Exchanges and Clearing is the world's
largest exchange group with a market capitalization of $19.5
ICE's main operations are in energy futures trading and
unlike NYSE Euronext, it has steered clear of stocks and
stock-options trading, so there is not much business overlap
between the two groups, making it more likely competition
authorities would approve a tie-up.
Last year, the U.S. Justice Department blocked a $11 billion
joint hostile bid by ICE and Nasdaq OMX Group for NYSE
Euronext on concerns the tie-up would dominate U.S. stock
If that bid had succeeded, ICE planned to buy NYSE Euronext
derivatives business while Nasdaq would have taken control of
the stock exchanges.
A rival $9.3 billion bid by German exchange operator
Deutsche Boerse also ran afoul of regulators.
"I doubt the competition authorities will have a problem
with it, there's only a modest overlap between the businesses,"
said Richard Perrott, an analyst at Berenberg Bank.
"The rationale for the deal will be the same as that with
Deutsche Boerse - migrate the clearing of Liffe derivatives to
ICE's services in London and scale up to attract OTC (Over The
Counter) derivatives clearing. There could be more than $300
million in cost savings in the deal."
Before the latest ICE offer emerged, NYSE Euronext's shares
haD fallen by nearly a third since ICE and Nasdaq launched their
thwarted joint bid.
The New York Stock Exchange, known as the Big Board and the
symbol of U.S. capitalism, has seen its clout fade as new
technology and the rise of private trading venues run by Wall
Street banks and brokers cut its margins.
Founded in 2000 as a U.S. electricity trading platform
backed by Wall Street banks and energy traders, ICE is the
product of a string of acquisitions, from the London-based
International Petroleum Exchange in 2001 through the New York
Board of Trade and, most recently, a handful of smaller deals,
including a climate exchange and a stake in a Brazilian clearing