CME GROUP BUYING LONDON EXCHANGE
LONDON — Chicago- based CME Group, parent company of the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange and Comex metals exchange, is taking over London- based peer Nex in a deal that values the British company at $ 5.4 billion.
CME and Nex said in a statement Thursday that Nex shares will be paid 10 pounds each, a premium of about 49 percent to their closing price on March 15, when an offer was first made.
CME said the deal will give it a greater presence in Europe and Asia. It expects savings of about $ 200 million by the end of 2021 by cutting costs.
In a statement, the CME said, “The proposed transaction has been approved unanimously by the board of directors of both companies and is expected to close, pending approvals by regulators and NEX shareholders, in the second half of 2018.”
According to the CME statement, Nex has leading electronic FX and fixed income cash execution platforms and “premier OTC post- trade products and services.”
London’s Financial Times reported that the combination would give CME the opportunity to potentially reform trading in the $ 500 billion- a- day market for U. S Treasury bonds, the main market for US government debt.
“At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally,” said CME Group Chairman and CEO Terry Duffy in the CME statement. “As one organization, we will be able to employ the complementary strengths of each company to serve a wider client base while diversifying our combined businesses across futures, cash and OTC products and post- trade services.”
The CME said that upon conclusion of the acquisition, Nex CEO Michael Spencer will join the CME Group Board of Directors and will remain with the combined company as a special adviser. The Financial Times and Bloomberg News said he will net about $ 940 million from the deal as Nex’s largest shareholder. Bloomberg called a competing bid for Nex “possible but not probable.”
It is the biggest deal for the CME since it bought the Nymex in New York in 2008 and also the CME’s largest overseas acquisition. Last year, the CME launched trading of futures in bitcoin, the most widely known virtual currency.