NYSE Sold for $8.2 Billion

NYSE Sold for $8.2 Billion

This post originally appeared on Business Insider.

NYSE-Euronext is a 220-year-old icon of global finance, but its 12 year-old Atlanta-based rival, IntercontinentalExchange (ICE) will buy it for $8.2 billion, according to a deal that has just been announced.

This revelation surprised a lot of people on the Street who thought all the exchange horse trading of 2010-2011 was over. In 2011, for example, the Justice Department blocked ICE and NASDAQ's attempt to buy the NYSE. NYSE was also stopped from merging with Germany's Deutsche Borse.


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Since 2010, $32 billion worth of attempted exchange merger/purchase deals have failed.

Here are the terms of the NYSE-Euronext ICE deal (from NYSE-Euronext):

"Under the terms of the agreement, which was unanimously approved by the Boards of both companies, the transaction is currently valued at $33.12 per NYSE Euronext share, or a total of approximately $8.2 billion, based on the closing price of ICE’s stock on December 19, 2012. NYSE Euronext shareholders will have the option to elect to receive consideration per NYSE Euronext share of (i) $33.12 in cash, (ii) 0.2581 IntercontinentalExchange common 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% shares and 33% cash. The transaction value of $33.12 represents a 37.7% premium over NYSE Euronext’s closing share price on December 19, 2012.

NYSE Euronext shareholders will own approximately 36% of ICE shares post-transaction."

It's all an attempt by exchanges to get bigger, more important business in a world of declining trading commissions where big investors (like mutual funds) are turning to private, dark pools to trade.

For its part, NYSE-Euronext has seen its share of trading in stocks listed on the exchange fall from 82% to 21%, according to Bloomberg. And while it does own the largest exchanges by value of listings in the U.S., and parts of Europe, it needs to grow its share in a business that has become more important than trading simple stock and stock options — trading derivatives.

From January to September of this year, NYSE-Euronext made $357 million, down 32% from the same period last year.

That's where ICE comes in. It's a commodities futures exchange that especially focuses on energy futures. Since NYSE-Euronext doesn't have that business, the Justice Department may not consider this merger an anti-trust violation.

The trading of NYSE-Euronext stock were halted as the deal was being discussed, but before that it seemed like the market liked the idea of the ICE buying NYSE-Euronext as their shares were soaring.

For the press release and benefits of the transaction, continue reading at Business Insider.

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