Acquisition will help ICE compete with arch rival CME Group

Intercontinental Exchange (ICE) on Thursday agreed a $8-billion deal to buy New York Stock Exchange owner NYSE Euronext, propelling the commodities player into the big league of European derivatives and helping it to take on arch rival CME Group.

ICE will look at selling Euronext, NYSE’s European stock market business, in an initial public offering after the deal closes in the second half of next year.

“Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities,’’ ICE Chairman and CEO Jeff Sprecher said in a statement.

ICE will buy NYSE, which also owns derivatives market Liffe, for $33.12 a share in stock and cash, a 37 per cent premium to its Wednesday closing price and valuing NYSE Euronext at $8.2 billion. NYSE Euronext shares rose nearly 32 per cent after the deal was announced, while ICE's shares fell 4 per cent.

Analysts said the deal would give Atlanta-based ICE a strategic boost with control of Liffe, Europe's second-largest derivatives market, helping it compete with U.S.-based CME Group Inc, owner of the Chicago Board of Trade.

ICE, founded in 2000, has its roots in electronic commodity trading and a tie-up with Liffe will boost trade for soft commodities such as sugar, buoying its profits.

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 show.

ICE's main operations are in energy futures trading and unlike NYSE Euronext, it has steered clear of stocks and stock-options trading. 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 listings.

ICE said it expected to achieve $450 million in cost savings from the deal. — Reuters

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