NYSE-ICE Merger to Close on Nov 4 - Analyst Blog


Shares of IntercontinentalExchange Inc. ( ICE ) have been on an uptrend since ICE and NYSE Euronext Inc. ( NYX ) jointly declared that they have set the closing date for the acquisition of NYSE Euronext by ICE for Nov 4, 2013. Shares of ICE shored up 1.3% to $195.66 on Oct 14. The deal is subject to the remaining approvals from the European regulators and might be extended if any necessary approvals remain pending on that date.

The transaction was first announced on Dec 20, 2012, whereby IntercontinentalExchange had decided to acquire NYSE Euronext for a purchase consideration of $8.2 billion or $33.12 per share. Of the entire $8.2 billion, 67% or approximately $5.5 billion is in shares and the remaining 33% or nearly $2.7 billion is in cash. The deal was scheduled to culminate in the first half of 2013 and had been pending approval on many fronts.

The deal was being scrutinized by the European Union Comission (EUC), particularly, in terms of the effect of the merger on agricultural and soft commodity derivatives along with U.S. equity derivatives.  In Jun 2013, the deal received a green signal from the EUC, making the NYSE Euronext-IntercontinentalExchange merger the third largest global exchange after the Hong Kong Exchanges and Clearing and CME Group Inc. ( CME ). Later, in Jul 2013, 43 member firms and 75 million contract sides of NYSE Euronext were transferred to ICE Clear Europe, a wholly owned subsidiary of IntercontinentalExchange.

Earlier this month, IntercontinentalExchange issued long-term notes worth $1.4 billion to finance the aforementioned deal. The first set comprised $600 million worth of notes at an interest rate of 2.5%. These notes are slated to mature in 2018. The remaining $800 million worth of notes bore an interest rate of 4.0% and are due to mature in 2023. Both the 5-year and 10-year notes, along with IntercontinentalExchange's $1.8 billion of revolving credit facility and $1.0 billion cash, will be used to fund the cash component of NYSE acquisition. Concurrently, Moody's Investor Service, the credit rating agency of Moody's Corp. ( MCO ) assigned an "A3" rating on the senior debt of the holding company of IntercontinentalExchange, with a stable outlook.

IntercontinentalExchange carries a Zacks Rank #3 (Hold).

CME GROUP INC (CME): Free Stock Analysis Report

INTERCONTINENTL (ICE): Free Stock Analysis Report

MOODYS CORP (MCO): Free Stock Analysis Report

NYSE EURONEXT (NYX): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CME , ICE , MCO , NYX



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