Market participants to benefit from geographic footprint, scale and world-class technologies; further growth and innovation in derivatives markets
NEW YORK and ATLANTA, April 1, 2011 /PRNewswire/ --
- Creates a leading global exchange in equities, options, listings and exchange related technology to compete in the increasingly competitive global exchange market
- Establishes a leading transatlantic derivatives platform that would promote continued competition in Europe and the U.S.
- Represents a superior proposal to the Deutsche Boerse takeover proposal
- Offers greater long-term value for stockholders by putting existing businesses under managements recognized for integration capabilities and efficiency
- Strengthens U.S. and European cash equities competitive position for raising capital and creating jobs
- Strengthens ability of regulators to oversee markets and reduces market fragmentation and flash-crash scenarios
NASDAQ OMX (Nasdaq: NDAQ) and IntercontinentalExchange (NYSE: ICE) today announced that they have made a joint proposal to acquire NYSE Euronext (NYSE: NYX) for $42.50 in cash and stock per NYSE Euronext share, or approximately $11.3 billion, based on the respective NASDAQ OMX and ICE closing share prices as of March 31, 2011. The proposal, delivered today in a letter to the Board of Directors of NYSE Euronext, represents a 19 percent premium over the price proposed by Deutsche Boerse, based on Deutsche Boerse's closing share price as of March 31, 2011, and a 27 percent premium over NYSE Euronext's unaffected stock price on February 8, 2011, the day prior to NYSE Euronext's statement that they were in discussions with Deutsche Boerse regarding a transaction.
Under the terms of the proposed acquisition, NYSE Euronext stockholders would receive $14.24 in cash, plus 0.4069 shares of NASDAQ OMX common stock and 0.1436 shares of ICE common stock for each NYSE Euronext share.
As part of the proposal, ICE would purchase NYSE Euronext's derivatives businesses, and NASDAQ OMX would retain NYSE Euronext's remaining businesses, including the NYSE Euronext stock exchanges in New York, Paris, Brussels, Amsterdam and Lisbon, as well as the U.S. options business. A combination of NASDAQ OMX and NYSE Euronext would merge the trading, listings, options and market technology businesses of the two companies to create a leading international exchange, headquartered in New York City, with a geographic footprint in sixteen countries and best-in-class technology expertise that is used in over 60 markets internationally. ICE and NASDAQ OMX will continue to operate as separate businesses throughout the proposed transaction, as well as after its completion.
Robert Greifeld, Chief Executive Officer of NASDAQ OMX, said: "Our industry is undergoing a period of historic change. During the last five years more than 90 percent of the top 100 global listings chose not to list in the U.S., depriving U.S. investors of the opportunity to easily invest and trade in these companies. The combination of the two leading U.S. exchanges delivers an opportunity to build a global exchange platform that has the scale and growth potential to benefit investors, issuers and other market participants. We believe it would increase transparency and liquidity in U.S. markets and create jobs as new companies raise capital. For Europe, it strengthens the equity markets by creating a new, truly pan-European equity trading platform and solidifies Paris and London as premier financial hubs. Given that our proposal is clearly a superior proposal, we hope that NYSE Euronext's Board will recognize this opportunity as well as the benefits for NYSE Euronext's employees and customers."
Jeffrey C. Sprecher, Chairman and Chief Executive Officer of ICE, said: "Given the dynamics in derivatives markets today, the pace of innovation and the need for competition, we are well positioned to bring more value to stockholders by ensuring that Liffe participates in the growth opportunities in our space. In addition to expanding our clearing capabilities to interest rates, we would enable increased competition in the U.S., where interest rates futures are dominated by one exchange with approximately 95 percent market share. And, in Europe, we would offer an attractive solution to preventing that same business from being dominated by a single competitor while preserving global innovation around additional risk management services."
ICE's acquisition of NYSE Euronext's European futures markets, Liffe, Liffe U.S., and the over-the-counter clearing business, NYPC, would leverage its existing leading derivatives markets across futures and over-the-counter markets and clearing houses in the U.S. and Europe.
A combined NASDAQ OMX and NYSE Euronext would have leadership positions across all major business lines, including a world-class cash trading business in U.S. and European equities and a preeminent U.S. options business. Together, NASDAQ OMX and NYSE Euronext would strengthen the international competitive position of the U.S. at a time when companies and investors are increasingly being drawn to other financial centers:
- Since 1995, listings on U.S. exchanges have contracted from 8,000 to 5,000 while listings on non-U.S. exchanges grew from 23,000 to 40,000
- In 2010, the U.S. generated only 16 percent of capital raised worldwide and attracted the listing of only 1 of the 10 largest global IPOs (GM)
A unified U.S. equities market would ensure that the U.S. is better able to compete globally in a rapidly changing international market for equity trading and capital-raising. A unified technology platform would also lower firms' and investors' trading costs and provide increased liquidity and transparency, while maintaining continued U.S. regulatory oversight of the capital markets to protect investors.
ICE's acquisition would create a strong global competitor in listed derivatives markets and central counterparty clearing:
- Creates a leading exchange operator with $1.8 billion in combined revenues
- Leverages ICE's existing global derivatives markets, technology and clearing houses to achieve meaningful synergies, while supporting the development of competitors to dominant US and European exchanges
- Capitalizes on ICE's ability to innovate and grow markets through new product development, clearing and post-trade services
NYSE Euronext stockholders would receive $14.24 in cash, plus 0.4069 shares of NASDAQ OMX common stock and 0.1436 shares of ICE common stock for each share of NYSE Euronext common stock.
NASDAQ OMX and ICE each have significant experience integrating exchange businesses and have proven track records of realizing synergies and creating stockholder value on an absolute and relative basis within the exchange sector. Overall, the combined companies would feature highly complementary lines of business with significant synergy opportunities. This would lead to meaningful value creation for the combined companies' stockholders, with an expected $740 million in total net synergies fully realized by the end of the third year following the closing of the transaction.
A combined NASDAQ OMX/NYSE Euronext would provide accretion to stockholders 12-18 months following the close of the transaction and double digit accretion soon after the 12-18 month period. It would also deliver strong pro forma cash flow generation to invest in the business and service debt. ICE's acquisition would also be solidly accretive to ICE stockholders in year two and would leave ICE with substantial financial flexibility.
NASDAQ OMX and ICE would finance the cash portion of the acquisition purchase price through cash on hand and a combined $3.8 billion financing commitment. Both firms have received strong support from a group of leading institutions, including Bank of America and Wells Fargo, which together would be prepared to arrange fully committed financing required to complete the transaction. The repayment of debt would be financed by the strong cash flows of the combined companies.
Steps to Completion
NASDAQ OMX and ICE believe that the proposed combination would satisfy the required regulatory approvals in all jurisdictions. NASDAQ OMX and ICE believe that they can secure E.U. competition clearance in contrast to the expectation of a deep and extended probe for the proposed Deutsche Boerse transaction.
The NASDAQ OMX/ICE proposal requires approval from the majority of NASDAQ OMX and ICE stockholders, versus the requirement of a 75% acceptance level of the exchange offer by Deutsche Boerse's shareholders. Both proposals will require approval of a majority of NYSE Euronext stockholders.