NYSE Euronext and ICE in $8.2-bn merger

IntercontinentalExchange (ICE), the upstart Chicago-based commodities and derivatives trading firm, yesterday tabled a $8.2-billion bid for New York Stock Exchange owner NYSE Euronext, in order to gain control of NYSE Liffe, Europe's second-largest derivatives exchange, and help it to compete against its larger US rival CME Group.

The merger would combine two leading exchange groups to create a global exchange operator across diversified markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates.

Under the terms of the deal, which has been approved by the boards of both companies, the transaction is currently valued at $33.12 per NYSE Euronext share, or approximately $8.2 billion, based on the closing price of ICE's stock on 9 December, and is a 37.7-per cent premium over NYSE Euronext's closing share price on 19 December.

The overall mix of the $8.2 billion of merger amount being paid by ICE is approximately 67 per cent shares and 33 per cent cash, with the cash portion to be funded by a combination of cash on hand and existing ICE credit facilities.

ICE hopes to generate synergies of $450 million in the second full year post-closing, and expects the deal to close in the second half 2013, subject to regulatory approvals in Europe and the US and approval by shareholders of both companies.

ICE said that it is committed to preserving the NYSE Euronext brand and will maintain dual headquarters in Atlanta and New York. It will also maintain the position of NYSE Liffe in London as a leading international market operator for derivatives products, including its benchmark interest rate complex.