US exchange giant CME Group has agreed to buy British operator NEX for about 3.9 billion pounds (US$5.5 billion) in a deal aimed at cost-cutting and diversifying their businesses, it said yesterday.
The cash-and-shares takeover offer, worth US$5.4 billion, valued each NEX share at 10 pounds, Chicago-based CME announced in a statement.
NEX will shift headquarters to Chicago, but the company will keep its European headquarters in London in a Brexit boost to Britain’s financial services sector.
“The boards of CME and NEX are pleased to announce that they have reached agreement on the terms of a recommended acquisition,” the pair said in a statement issued in London.
CME Group, which owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, added that there was a “compelling strategic and financial rationale” for the deal.
“At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, the acquisition will allow us to create significant value and efficiencies for our clients globally,” said CME chairman and chief executive officer Terry Duffy.
“As one organization, we will be able to employ the complementary strengths of each company, while diversifying our combined businesses across futures, cash and OTC (over-the-counter) products and post-trade services.”
NEX chief executive Michael Spencer added the move to maintain CME’s European base in London was a “tremendous” boost to the sector, which continues to face uncertainty before Britain’s departure from the European Union in one year.
“CME’s decision to choose London as its European headquarters is also a signal of tremendous support for Britain’s financial services sector,” 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.”