ICE-NYSE Attempt to Ease Merger - Analyst Blog
20 Marzo 2013 - 6:56PM
Zacks
In an effort to simplify the merger process, both
IntercontinentalExchange Inc. (ICE) and
NYSE Euronext Inc. (NYX) are making the necessary
modifications in the business structures.In Dec last year,
IntercontinentalExchange agreed to acquire NYSE Euronext for $8.2
billion.
According to Reuters, IntercontinentalExchange has
filed a regulatory statement to form a new holding company – ICE
Group Inc. Subsequently, both IntercontinentalExchange and NYSE
Euronext will operate as subsidiaries under ICE Group. While the
financial terms of the merger remain unaltered, each common equity
shareholder of IntercontinentalExchange willown the right to
possess one share of the new holding company.
Terms of the Merger
The $8.2 billion deal is based on $33.12 per NYSE share, which
represents a 37.7% premium on NYSE’s closing price on Dec. 19.
Moreover, the investors at NYSE have the option of taking cash
payment of $33.12 a share or receive 0.2581 shares of
IntercontinentalExchange for each NYSE share.
A third option includes a mix of $11.27 in cash along with
0.1703 IntercontinentalExchange shares per NYSE share, although
this funding is restricted to a maximum cash outlay of $2.7 billion
and a maximum stock outlay of 42.5 million shares of
IntercontinentalExchange.
Post acquisition, the 220-year old NYSE will own 36% in the
12-year old IntercontinentalExchange, while four members of the
former will share the latter’s board.
Consolidating Businesses to Gain Efficiency
Both the parties are vigorously working toward making the merger
sail through the regulations in the US and Europe. Last week,
Bloomberg also reported that IntercontinentalExchange is
in the final leg of its discussions with the regulators to spin off
the 4 European exchanges owned by NYSE Euronext in Lisbon, Paris,
Amsterdam and Brussels.
All these exchanges are part of Euronext NV that was integrated
with NYSE Group Inc. in 2007 to form NYSE Euronext. However, the
deal still requires the approval from the European regulators on
antitrust issues.
Overall, IntercontinentalExchange is working on a strategy that
would help the merger gain a nod from the regulators soon.
Moreover, the company aims to leverage NYSE’s efficiencies and
global presence productively, thereby positioning it well to tap
growth opportunities and bring forth a strong competitive
advantage. The merger is expected to culminate by the second half
of this year.
While NYSE Euronext carries a Zacks Rank #2 (Buy),
IntercontinentalExchange holds a Zacks Rank #3 (Hold). Other strong
performers in the financial sector include Euronet Worlwide
Inc. (EEFT) and Moody’s Corp. (MCO), both
of which carry a Zacks Rank #1 (Strong Buy).
EURONET WORLDWD (EEFT): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
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