FRANKFURT (Reuters) - Deutsche Boerse (DB1Gn.DE) said on Sunday that it will buy the Germany-based foreign exchange trading platform 360T for 725 million euros ($796 million).
360T is one of a handful of multi-bank, multi-user platforms which have revolutionized foreign exchange trading over the past decade. Deutsche Boerse beat U.S. commodities and currency exchange operator CME Group (CME.O) in the auction, according to sources familiar with the deal.
The deal is the biggest acquisition by Deutsche Boerse since the Frankfurt-based stock-exchange operator bought U.S. derivatives exchange ISE in 2007 for $2.8 billion. It is also the first large deal by the new Chief Executive Carsten Kengeter, who is targeting further buys.
He is already in talks with Swiss Six Group to buy the remaining stakes in their index joint ventures Stoxx and Indexium.
From a strategic growth perspective, Deutsche Boerse wanted to be a leading global marketplace for multiple asset classes. With FX being the single largest asset class, that made 360T a “must have” for the German exchange, a person familiar with the deal said Sunday.
Jefferies LLC acted as financial advisor to 360T and Morgan Stanley (MS.N) advised Deutsche Boerse.
Over the last couple of years, several merger and acquisitions had failed, among others a planned tie-up with the New York Stock Exchange 2012.
Deutsche Boerse said it expects double-digit million euro revenue synergies in the medium term from the deal, which it expects to be immediately accretive to cash earnings.
A company spokesman said most of the 360T acquisition will be financed with bonds, while no decision has been taken about a potential small capital increase. He added that Deutsche Boerse aims to keep its indebtedness at a level allowing for the AA rating of its Clearstream unit to remain unchanged.
With volatility, volumes and returns booming in the dollar’s rally over the past year, currency trading is attracting more attention from banks, retail trading houses and investors.
Deutsche Boerse’s Eurex and other major exchange groups have been positioning themselves to take a role in what they expect with time will be a more heavily regulated market.
But those efforts have focused largely on more complicated instruments like options and futures rather than the spot currency transactions that make up the $5 trillion a day market, in which 360T is one of the biggest non-bank players.
360T founder Carlo Koelzer is credited a decade ago with helping launch a new generation of forex platforms that allowed European companies to pick and choose which banks they traded currencies with.
Data from industry publisher Euromoney shows 360T is now the third-largest such platform, behind Thomson Reuters-owned FXAll (TRI.TO), FX Connect and just ahead of Bloomberg. 360T Managing Director Alfred Schorno told Reuters earlier this year that trading on 360T was above 100 billion euros a day, although the company has since ceased to publish volume data.
360T was founded in 2000. Private equity group Summit Partners took a majority stake in 2012, peer Brockhaus has kept a 10.7 percent stake and 360T employees also retained stakes.
The deal makes 360T the most valuable German fintech company and in the view of the German Startup Association, the transaction will make it easier for other fintech firms to find investors.
Additional reporting by Mike Stone in New York; Editing by Larry King and Grant McCool