Extending its foothold in the rapidly developing energy space,
) announced an alliance with Gasunie that offers gas
infrastructure. Under this deal, both the entities jointly formed a
new venture from the spot gas and derivative business of
Amsterdam-based exchange - APX-ENDEX.
Accordingly, IntercontinentalExchange owns 79.12% in the
derivatives and spot gas business of APX-ENDEX, while Gasunie holds
a share similar to the ealier level, which is 20.88%. Prior to this
business restructuring, TenneT owned 56.1% of APX-ENDEX, Gasunie
held 20.9%, Elia had 20% and Fluxys owned 3%.
Although the value of the deal remains undisclosed, it will be
funded by the excess cash of the company. The transaction is
expected to culminate in the first quarter of 2013, subject to
Post the acquisition, APX-ENDEX will be reorganized and spun-off
its business into two distinct units - one is a power spot and
clearing business and the other is a derivatives and spot natural
Meanwhile, the gas business is located in Europe's leading
natural gas trading hubs -around the Title Transfer Facility (TTF)
Virtual Trading Point in the Netherlands. This business will also
encompass the UK On-the-day Commodity Market (OCM) and the Belgian
Zeebrugge Trading Point (ZTP), which is set to launch at the end of
The acquisition of APX-ENDEX and expansion of the energy
portfolio in Europe is another attempt by IntercontinentalExchange
to evolve through its hedging strategies, product modification and
innovation, thereby supporting volumes and the top-line growth in
the long run. Allying with the leading Gasunie further helps
IntercontinentalExchange achieve its aim of building a highly
liquid and competent hedging and trading platform in the gas and
power markets of Europe.
Additionally, the company already offers more than 730 cleared
OTC energy contracts, including more than 640 new cleared OTC
contracts since the launch of ICE Clear Europe in November
Such products incorporate transparency and risk-management
features to the trading, which should help in gaining the
confidence and attracting the untapped customer-base. We believe
that the latest acquisition will further enhance
IntercontinentalExchange's market retention capacity, also
reflecting sound utilization of its capital.
Moreover, the outlay of its growth plan, earlier this year, by
dominant players such as
NYSE Euronext Inc.
CME Group Inc.
) through acquisitions, setting up of clearinghouses along with new
product and service initiations in the derivatives market,
primarily focused on the expansion in Europe. Thus,
IntercontinentalExchange's latest acquisition also blends well with
the ongoing competitive growth strategy.
IntercontinentalExchange carries a Zacks Rank #3, which implies
a short-term Hold rating, while the long-term recommendation stands
CME GROUP INC (CME): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis Report
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