Eurex and International Securities Exchange (ISE) have signed a definitive agreement under which Eurex will acquire ISE for approximately $2.8 billion in cash, or $67.50 per share.
The combination will be implemented by way of a merger and is subject to approval by the holders of a simple majority (50 percent plus one share) of ISE outstanding common stock at a special shareholder meeting, receipt of regulatory approval by the US Securities and Exchange Commission and other customary closing conditions.
ISE’s board of directors has recommend to shareholders to vote in favor of the transaction, they said in a statement.
The transaction will create the largest transatlantic derivatives marketplace with significant USD and Euro product coverage and with significant operations and revenues in both the U.S. and Europe, the two largest markets based on market capitalization.
“This transaction further expands Deutsche Boerse’s leading position in the fast growing global derivatives markets,” Deutsche Boerse CEO Reto Francioni said. “The agreement is a strategic milestone for us that will further fuel our strong growth prospects and create significant value for shareholders. This transaction underscores our approach to combine strong organic growth with value creating acquisitions.”
David Easthope, senior analyst in the securities and investments practice at Celent research and consulting firm, said the acquisition will provide Deutsche Boerse through Eurex with a significant share of the US options market.
“However, what is less discussed here is that the ISE Holding company also owns the ISE Stock Exchange, which is a US equities exchange approved for formation by the SEC,” he said. “Thus, today’s announcement could herald the second transatlantic equities exchange acquisition, after NYSE Euronext.”
The TABB Group research firm also weighed in on the acquisition.
“Deutsche Boerse competitors in the US certainly need to stand up and take notice, especially given the very-public statements by management of both the NASDAQ and NYSE Euronext that left no doubt as to how important derivatives will be to their future success,” said Andy Nybo, senior analyst for TABB. “Deutsche Boerse will become a leader in the U.S. options business overnight, establishing its presence as a leading player in the U.S. derivatives market and providing it with a base of operations that will allow it to expand into the highly competitive U.S. exchange industry.”