The New York Stock Exchange which is said to be the foundation of American capitalism for 220 years now, agreed to sell itself as part of the 8.2 billion dollar takeover by IntercontinentalExchange Inc. (ICE). According to the deal which was announced on 20 December 2012, ICE would be paying 33.12 dollar per share for NYSE Euronext, which is higher by 38 percent than the closing price on 19 December 2012.
ICE is an Atlanta-based company and laid its foundation just 12 years ago. It operates derivatives as well as commodities markets across the world. ICE is not very well known among general public but it still has huger market value in comparison to NYSE Euronext. This is so because the derivatives as well as options market have more value than stock trading markets.
When NYSE had merger with Euronext in 2006, it was declared as the merger of the equals. But the deal which took place on 20 December 2012 is said to be the independence loss for NYSE which is 220 years old. It also indicates the big takeover for a company like ICE. New company would have dual headquarters in Atlanta as well as New York.
ICE has the intention of spinning off a lot of European operations through its Euronext IPO (Initial Public Offering), considering that European policy makers as well as market conditions would support such an action. But such an action would keep NYSE Liffe market in London. NYSE Liffe market is said to be the leading market for the derivative products.
After-effects of the deal
After the deal, NYSE Euronext shares increased 32 percent. ICE shares decreased 2 percent. In the new company, ICE Chairman and CEO Jeffrey Sprecher would retain his roles. NYSE Euronext chairman and CEO Duncan Niederauer, on the other hand would be the president of this newly formed company.
Payment modes
Payment of 2/3rd purchase would be done in stock while 1/3rd would be paid in cash. 36 percent of stock would be held by NYSE Euronext shareholders in new combined company.
What might restrict the deal?
However, the deal remains subject to regulatory and shareholders approval. But it was unanimously agreed upon by the boards of NYSE Euronext and ICE.
Back in April 2011 too, ICE has aligned with NASDAQ OMX Group for making combined 11 billion dollar bid for NYSE Euronext. However, NYSE Euronext had refused this offer and preferred to join with a German Stock Exchange, Deutsche Bourse.
ICE and NASDAQ eventually dropped that effort because the deal which was likely to occur was blocked by U.S. Justice Department on the grounds of anti-trust.
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