ICE to Acquire NYSE for $8.2B
Traders Magazine Online News, December 20, 2012
The New York Stock Exchange will become part of an Atlanta-based collection of securities exchanges and clearing houses, if a merger announced Thursday morning gets approved by regulators and shareholders.
Intercontinental Exchange said it plans to acquire NYSE Euronext in a stock and cash deal worth $8.2 billion. Both companies’ boards approved the plan to merge early Thursday.
Intercontinental Exchange, typically called ICE, operates regulated markets that trade in agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates. The firm also operates a wide range of clearing houses and has launched houses in the United States and Europe that clear credit-default swap transactions.
ICE, NYSE business mix.
ICE will own and control the combined operation. Its chief executive, Jeffrey C. Sprecher, and chief financial officer, Scott A. Hill, will retain those positions in the new firm. NYSE Euronext chief executive Duncan L. Niederauer would become president of the overall combined company and be chief executive of the newly created NYSE Group inside ICE.
Sprecher said ICE is contemplating spinning off the European exchanges in Paris, Lisbon, Brussels and Amsterdam that constitute Euronext in an initial public offering of stock, to European investors.
NYSE Liffe, a futures and options exchange that accounts for about 40% of NYSE Euronext’s operating income, will start to use ICE Clear Europe for clearing services. That will happen regardless of whether the merger goes through, Sprecher said.
The “transformative transaction,’’ as Sprecher called it, represents an acquisition of a much larger and older capital markets company by a young, much more profitable operator.
The New York Stock Exchange traces its roots back to the meeting of twenty-four stockbrokers outside 68 Wall Street under a buttonwood tree to in May 1792. The first constitution of the New York Stock & Exchange Board was adopted in 1817.
IntercontinentalExchange was established in May 2000 by large energy dealers trying to establish a multi-dealer, around-the-clock exchange over the Internet.
Twelve years later, NYSE Euronext, formed in 2007 with the acquisition of Euronext by the NYSE, is still the larger of the two companies. Its revenues through September for this year are $2.5 billion. ICE’s revenues for the first nine months of 2012 are just over $1.0 billion.
But ICE “cleared” $429 million of that to its bottom line, or about 40%. NYSE Euronext “cleared” $506 million, or about 20%.
That kind of disparity left ICE with a market worth of $9.3 billion at the end of trading Wednesday. NYSE Euronext was, in investors’ minds, worth $5.8 billion.
If the deal is completed by the end of 2013, as intended, the combined company will operate 14 regulated exchanges and five clearing houses.
ICE-NYSE Investor Presentation
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