DECEMBER 20, 2012 8:35 AM
8:39 a.m. Updated
The owner of the 220-year-old New York Stock Exchange on Thursday agreed to an $8.2 billion deal that would give control of the longstanding symbol of American capitalism to an upstart competitor.
NYSE Euronext said that it would sell itself to the IntercontinentalExchange for about $33.12 a share in cash and stock. The combined company would have headquarters in both ICE’s home of Atlanta and in New York.
The takeover signals the revival of consolidation in the world of market operators, after a wave of deals dissipated amid concerns over antitrust and nationalist sentiment. ICE had partnered with NYSE Euronext’s main rival, the Nasdaq OMX Group, in an $11 billion hostile bid for the Big Board’s parent, but that offer was blocked by the Justice Department.
And NYSE Euronext had sought to combine with Deutsche Börse, creating a global giant in the trading of derivatives. But that merger was stymied by European antitrust regulators.
Thursday’s deal is expected to run into fewer problems. ICE and NYSE Euronext have little overlap: the former focuses on the trading of commodities like energy products, the latter on stocks and derivatives.
Indeed, while the New York Stock Exchange, with its opening bell and floor traders, has been the public image of a stock market for two centuries, it is NYSE Euronext’s businesses in the over-the-counter trading of derivatives — including the Liffe market in London — that is the main attraction in the merger talks.
As part of the deal, ICE will consider spinning off NYSE Euronext’s European stock market operations.
Shareholders of NYSE Euronext would own about 36 percent of the combined company.
ICE’s chief executive, Jeffrey C. Sprecher, would keep that role in the newly enlarged market operator. NYSE Euronext’s chief, Duncan L. Niederauer, would be president.
Both companies relied on armies of advisers. ICE was advised by Morgan Stanley, BMO Capital Markets, Broadhaven Capital Partners, JPMorgan Chase, Lazard, Société Générale and Wells Fargo. It received legal counsel from Sullivan & Cromwell and Shearman & Sterling.
NYSE Euronext was advised by Perella Weinberg Partners, BNP Paribas, the Blackstone Group, Citigroup, Goldman Sachs and Moelis & Company. It was counseled by Wachtell, Lipton, Rosen & Katz; Slaughter & May; and Stibbe N.V.
Mr. Niederauer issued a memo to NYSE Euronext employees. Here is a copy of the memo:
This morning we issued a joint press release with the Intercontinental Exchange Group (ICE) announcing the combination of our two great companies. Under the terms of this strategic transaction, ICE will acquire NYSE Euronext and bring together two highly complementary businesses, creating a strong global leader in derivatives and capital raising in the increasingly competitive global exchange space.
The agreement is a stock-cash transaction, with each share of NYX being exchanged for 0.1703 shares of ICE and $11.27 in cash, representing a value of $33.12 per share of NYX. NYX shareholders will own 36% of the combined company. The combined company will be led by Jeff Sprecher, the current Chairman and CEO of ICE, will be dually headquartered in Atlanta and New York City, and will maintain the iconic NYSE brand, building and trading floor. ICE is excited about integrating our Liffe business onto its own scalable platform for trading and clearing services. They have also been impressed with our commercial technology business and are enthusiastic about the opportunities that exist there. Given global industry and regulatory trends, ICE intends to explore an initial public offering of Euronext as a Continental European-based entity following the closing of the deal if market conditions and European policy makers support the offering.
As you have come to expect from me, I tell it like it is… In that vein let me be clear that this combination – while friendly and strategic – is an acquisition, not a merger of equals. However, this is NOT in any way an indication of weakness on our part or a sign that our strategy was not working. To the contrary, we have made tremendous progress executing against our strategy, despite an increasingly difficult macro environment. We’ve built a stronger company, with a great brand and a bright future. I am extremely proud that we created a company that can play such a leading role in the evolution of markets.
As I have said the entire time I’ve been CEO, scale is an imperative for the industry and consolidation is inevitable. I am sure many of you would agree that most companies would be afraid to try something transformational again given our experience last year, but that’s not the way we operate. This transaction delivers clear strategic benefits to our company and meaningful investment returns to our shareholders, and the combined company. We also believe it will offer exciting opportunities to many of our employees.
This combination creates one of the strongest financial exchanges in the world, with a well diversified set of businesses. We at NYSE Euronext have long admired ICE and seen them as a great strategic partner so I find it very exciting that the timing was right for both of us to join forces. We should also be excited to be combining with a company known, as we have come to be, for innovation and a great culture.
I look forward to the opportunity to work with Jeff well beyond the closing as President of the new company and CEO of the NYSE Group to ensure a smooth integration and deliver on the promise of what the envisioned company can be. We are not able to announce other management positions yet, but in addition to me, NYSE Euronext will be fairly represented on the new management team.
I recognize that this announcement creates uncertainty for many of you, and there are more questions than answers at this point. For a bit more information, you will find a Q&A document and the press release attached. I encourage you to read through these important documents. Jeff and I will host a live global town hall for employees today at 11:00 EST. As always, we will keep you updated as we have additional information to share.
In the meantime, it is extremely important that you remain focused on business as usual. Pending regulatory approvals, we expect this transaction to close in the second half of 2013. Throughout this process we ask that you and your teams continue to execute on your responsibilities and serve our customers with excellence as you always do.
Finally, let me just say thank you. This has been an unprecedented year for us – after European regulators blocked our proposed deal with DB, we did not give up or stand down but continued to execute and transform our business. I cannot adequately express how much I appreciate your focus and support.
Jeffrey Craig Sprecher was born on February 23rd, 1955 according to http://www.dellam.com/06180518-ICE%20FUTURES%20HOLDCO%20NO%201%20LIMITED.html
February 23rd, 1955
2 + 23 +1+9+5+5 = 45 = his life lesson = Intense. Focused. Common sense.
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