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NYSE-Euronext was purchased by long-time rival IntercontinentalExchange after the success of an unlikely merger.
shares or (iii) a mix of $11.27 in cash plus 0.1703 ICE common shares, subject to a maximum cash consideration of approximately $2.7 billion and a maximum aggregate number of ICE common shares of approximately 42.5 million. The overall mix of the $8.2 billion of merger consideration being paid by ICE is approximately 67 percent shares and 33 percent cash. The transaction value of $33.12 represents a 37.7 percent premium over NYSE Euronext’s closing share price on Dec. 19, 2012.
NYSE Euronext shareholders will own approximately 36 percent of ICE shares post-transaction.
The cash portion of the transaction will be funded by a combination of cash on hand and existing ICE credit facilities.
The transaction is expected to close in the second half 2013, subject to regulatory approvals in Europe and the US and approval by shareholders of both companies.
The majority of run-rate expense synergies of $450 million are expected to be achieved in the second full year post-closing.
Earnings accretion of greater than 15 percent is expected in the first year post-closing.
As a result of the transaction, ICE clearing will be more capital efficient and provide operational efficiencies for clearing members.
ICE is committed to preserving the NYSE Euronext brand. ICE will maintain dual headquarters in Atlanta and New York. New York headquarters will be located in the Wall Street building, home to the iconic trading floor. ICE will also open a new midtown Manhattan office in June 2013.
ICE is also committed to maintaining the position of NYSE Liffe in London as a leading international market operator for derivatives products, including its benchmark interest rate complex.
ICE intends to explore an initial public offering of Euronext as a Continental European-based entity following the closing of the acquisition if market conditions and European policy makers support the offering.
Jeffrey C. Sprecher will continue as Chairman and CEO of the combined company and Scott A. Hill as CFO. Duncan L. Niederauer will be President of the combined company and CEO of NYSE Group. Four members of the NYSE Euronext Board of Directors will be added to the ICE Board of Directors which will be expanded to 15 members.
"Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities, while enhancing competition in US and European markets and broadening our ability to address new markets and offer innovative products and services on a global platform," said ICE Chairman and CEO Jeffrey C. Sprecher. "We believe the combined company will be better positioned to compete and serve customers across a broad range of asset classes by uniting our global brands, expertise and infrastructure. With a track record of growth and returns, clearing and M&A integration, we are well positioned to transform our combined companies into a premier global exchange operator that remains a leader in market evolution."
“The Board of NYSE Euronext carefully considered a range of strategic alternatives and concluded that ICE is the ideal partner for NYSE Euronext in an evolving market landscape," said Jan-Michiel Hessels, Chairman of the Board of NYSE Euronext. "We look forward to working with ICE to complete this compelling, value-enhancing combination."
“This transaction leverages the strength of our iconic brand and the value we have created in our global equity and derivatives franchises – positioning the business for solid long-term growth and development,” said Duncan L. Niederauer, CEO of NYSE Euronext. “We are bringing together two highly complementary businesses, creating an end-to-end multi-asset portfolio that will be strongly positioned to serve a global client base and capture current and future growth opportunities.”
Benefits of the transaction include:
Acquisition will unlock significant value through the achievement of merger related cost synergies. ICE has successfully integrated more than a dozen acquisitions in the last decade, with a track record of delivering on or exceeding synergy commitments.
The transaction is expected to be highly accretive to earnings in the first year after closing and produce returns on invested capital above the transaction’s cost of investment beginning in year two.
Model delivers strong operating leverage while preserving healthy levels of recurring revenues and participation in a