Potentially strengthening its hand in a proposed merger with London Stock Exchange (LSE), the Deutsche Boerse is selling U.S. options exchange operator International Securities Exchange for $1.1 billion to Nasdaq.
Having written it down continuously since acquiring it for $2.8 billion in 2007, Deutsche Boerse said late on Wednesday that it was set to book a disposal gain in the high triple-digit millions of euros from selling ISE.
Analysts at brokerage Equinet said that Deutsche Boerse would have additional cash to increase its LSE offer in the event of a takeover battle for the British company and added that the German exchange's shareholders could benefit through an extra dividend or share buyback.
Intercontinental Exchange said this month that it might make a rival offer for LSE.
Money is not the only consideration in that deal cautioned people familiar with the merger talks between Deutsche Boerse and its European peer.
Since it would change the character of the deal from a merger of equals to a takeover by Deutsche Boerse, such a step may make it harder to secure political backing in London while an enhanced offer may help to win over shareholders, they said.
Claiming that it is unclear whether counter-bidders really want to buy LSE or want to weaken competitors by forcing them to pay more, Deutsche Boerse Chief Executive Carsten Kengeter has said that he has alternatives if the LSE merger does not go through.
Together accounting for more than 15 percent of U.S. volumes, ISE operates three electronic options exchanges while Nasdaq operates another three. Extending its lead as the No.1 U.S. options exchange operator in a combined stage, Nasdaq would command more than 40 percent of the market.
"The ability to further that lead gives us advantages as to how we could serve our customers because you have a different volume-versus-scale arrangement," Nasdaq Chief Executive Bob Greifeld said in an interview.
It plans to merge with LSE to create a European trading powerhouse that could better compete with U.S. rivals says Deutsche Boerse and the deal would also free up capital for that purpose.
It could strip out $40 million of costs from the two businesses through the transaction, said Nasdaq, which plans to move ISE's trading platforms onto Nasdaq technology.
Taking its stake in the world's largest equity derivatives clearing business to 40 percent, the deal would also give Nasdaq an additional 20 percent of the Options Clearing Corporation.
Talks with Deutsche Boerse's Kengeter picked up over the past three months Greifeld said even though he had been looking to buy ISE for years.
The German company said that ISE's stake in No.2 U.S. stock exchange operator BATS Global Markets or blockchain start-up Digital Asset Holdings would not be included in the deal and both would continue to be owned by Deutsche Boerse.
The ISE transaction is expected to be finalised in the second half of the year, pending regulatory approval, and is likely to increase earnings within 12 months of closing, said Nasdaq, which has boosted its profit and share price through a number of acquisitions in recent years.
(Source:www.reuters.com)
Having written it down continuously since acquiring it for $2.8 billion in 2007, Deutsche Boerse said late on Wednesday that it was set to book a disposal gain in the high triple-digit millions of euros from selling ISE.
Analysts at brokerage Equinet said that Deutsche Boerse would have additional cash to increase its LSE offer in the event of a takeover battle for the British company and added that the German exchange's shareholders could benefit through an extra dividend or share buyback.
Intercontinental Exchange said this month that it might make a rival offer for LSE.
Money is not the only consideration in that deal cautioned people familiar with the merger talks between Deutsche Boerse and its European peer.
Since it would change the character of the deal from a merger of equals to a takeover by Deutsche Boerse, such a step may make it harder to secure political backing in London while an enhanced offer may help to win over shareholders, they said.
Claiming that it is unclear whether counter-bidders really want to buy LSE or want to weaken competitors by forcing them to pay more, Deutsche Boerse Chief Executive Carsten Kengeter has said that he has alternatives if the LSE merger does not go through.
Together accounting for more than 15 percent of U.S. volumes, ISE operates three electronic options exchanges while Nasdaq operates another three. Extending its lead as the No.1 U.S. options exchange operator in a combined stage, Nasdaq would command more than 40 percent of the market.
"The ability to further that lead gives us advantages as to how we could serve our customers because you have a different volume-versus-scale arrangement," Nasdaq Chief Executive Bob Greifeld said in an interview.
It plans to merge with LSE to create a European trading powerhouse that could better compete with U.S. rivals says Deutsche Boerse and the deal would also free up capital for that purpose.
It could strip out $40 million of costs from the two businesses through the transaction, said Nasdaq, which plans to move ISE's trading platforms onto Nasdaq technology.
Taking its stake in the world's largest equity derivatives clearing business to 40 percent, the deal would also give Nasdaq an additional 20 percent of the Options Clearing Corporation.
Talks with Deutsche Boerse's Kengeter picked up over the past three months Greifeld said even though he had been looking to buy ISE for years.
The German company said that ISE's stake in No.2 U.S. stock exchange operator BATS Global Markets or blockchain start-up Digital Asset Holdings would not be included in the deal and both would continue to be owned by Deutsche Boerse.
The ISE transaction is expected to be finalised in the second half of the year, pending regulatory approval, and is likely to increase earnings within 12 months of closing, said Nasdaq, which has boosted its profit and share price through a number of acquisitions in recent years.
(Source:www.reuters.com)
