In an effort to simplify the merger process, both
NYSE Euronext Inc.
) are making the necessary modifications in the business
structures.In Dec last year, IntercontinentalExchange agreed to
acquire NYSE Euronext for $8.2 billion.
, IntercontinentalExchange has filed a regulatory statement to
form a new holding company - ICE Group Inc. Subsequently, both
IntercontinentalExchange and NYSE Euronext will operate as
subsidiaries under ICE Group. While the financial terms of the
merger remain unaltered, each common equity shareholder of
IntercontinentalExchange willown the right to possess one share
of the new holding company.
Terms of the Merger
The $8.2 billion deal is based on $33.12 per NYSE share, which
represents a 37.7% premium on NYSE's closing price on Dec. 19.
Moreover, the investors at NYSE have the option of taking cash
payment of $33.12 a share or receive 0.2581 shares of
IntercontinentalExchange for each NYSE share.
A third option includes a mix of $11.27 in cash along with
0.1703 IntercontinentalExchange shares per NYSE share, although
this funding is restricted to a maximum cash outlay of $2.7
billion and a maximum stock outlay of 42.5 million shares of
Post acquisition, the 220-year old NYSE will own 36% in the
12-year old IntercontinentalExchange, while four members of the
former will share the latter's board.
Consolidating Businesses to Gain Efficiency
Both the parties are vigorously working toward making the
merger sail through the regulations in the US and Europe. Last
also reported that IntercontinentalExchange is in the final leg
of its discussions with the regulators to spin off the 4 European
exchanges owned by NYSE Euronext in Lisbon, Paris, Amsterdam and
All these exchanges are part of Euronext NV that was
integrated with NYSE Group Inc. in 2007 to form NYSE Euronext.
However, the deal still requires the approval from the European
regulators on antitrust issues.
Overall, IntercontinentalExchange is working on a strategy
that would help the merger gain a nod from the regulators soon.
Moreover, the company aims to leverage NYSE's efficiencies and
global presence productively, thereby positioning it well to tap
growth opportunities and bring forth a strong competitive
advantage. The merger is expected to culminate by the second half
of this year.
While NYSE Euronext carries a Zacks Rank #2 (Buy),
IntercontinentalExchange holds a Zacks Rank #3 (Hold). Other
strong performers in the financial sector include
Euronet Worlwide Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).
EURONET WORLDWD (EEFT): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis
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