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Screenshot of a breaking news alert e-mail from Q2 2017
After confirming that preliminary talks were indeed going on behind the scenes about two weeks ago, cross-ocean rival electronic market operators CME Group Inc (NASDAQ:CME) and London listed NEX Group PLC (LON:NXG) have announced that CME will be buying NEX in a £3.9 billion (USD $5.4 billion) cash and shares deal.
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.
NEX shareholders will received 500 pence in cash, plus 0.0444 shares of CME Group Class A common stock (at current value also worth 500 pence), for a total of £10 per share offered. NEX shares closed yesterday at 972 pence.
This acquisition brings together two trading-industry trailblazers and creates a leading, client-centric, global markets company that will deliver better ways to trade and manage risk across futures, cash and OTC products.
The companies said that combining NEX’s leading electronic FX and fixed income cash execution platforms with CME Group will improve trading technology and streamline access by reducing the number of touchpoints that clients need to trade across products. In addition, NEX’s premier OTC post-trade products and services complement CME Group’s derivatives clearing services. Combining these solutions will strengthen the NEX compression, reconciliation and processing businesses. The combination will also facilitate the development of innovative post-trade services and data offerings to further enhance cost-effective trading and risk management.
CME Group Chairman and Chief Executive Officer Terry Duffy said:
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. 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.
Michael Spencer and his senior leadership team have built a world-class organization that is at the center of capital markets. We are committed to maintaining the longstanding relationships NEX has with its clients, and exchange and clearing house partners. Building on NEX’s deep roots in Europe and Asia and CME’s strong technology platform, we will transform our international profile and broaden our distribution network in spot and futures FX products as well as cash, repo and futures products in U.S. Treasuries.
Following completion of the acquisition, NEX CEO Michael Spencer will join the CME Group Board of Directors. He will remain with the combined company as a Special Adviser, working to drive the integration and continued evolution of the NEX businesses. He also will be ambassador for the combined company, working with key clients, regulators and officials in EMEA and Asia.
Michael Spencer said,
The combination of NEX and CME will be an industry-changing transaction. Bringing together cash and futures products and OTC services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets. The technology and innovation opportunities will be diverse and extraordinary. Clients will be better served.
CME’s decision to choose London as its European headquarters is also a signal of tremendous support for Britain’s financial services sector.
The full CME Group-NEX Group announcement can be seen here.