The US exchange operator, Chicago Mercantile Exchange (CME) Group has offered £10 a share or £3.8 billion ($5.4 billion) to Britain’s NEX Group for its acquisition. The proposed buyout of Michael Spencer’s NEX Group by the $56bn Chicago based exchange operator will create a cross-border trading powerhouse. The acquisition talks headed by Terry Duffy, CEO of CME Group finalized the deal with Mr Spencer after several months of negotiations. The formal announcement of the deal could be announced as soon as Thursday.
NEX in a statement on Wednesday said that it has received a non-binding proposal from CME Group for the proposed acquisition of all shares at an indicative price of £10 ($14) a unit. According to few analysts, the high acquisition price or premium will help to knock down any counteroffer to the acquisition. Post announcement of the development by Bloomberg News, the shares of NEX gained as much as 11 percent.
The CME group’s offer is 49 percent higher than the London-based NEX’s closing price on March 15, before the first news broke out of possible acquisition. Mark Spencer, one of biggest shareholder of NEX Group who owns 18 percent stake of NEX Group, stands to make about £670 million from the deal.
With NEX announcing its final offer, potential bids from rivals such as London Stock Exchange Group Plc, IHS Markit Ltd, Deutsche Boerse AG or Singapore Exchange Ltd could also follow.
The proposed acquisition will shake up the US trading industry as the combination of both entity will put $500bn-a-day US Treasuries market, the main market for the US government debt. NEX is the biggest venue for trading securities between banks and high-frequency traders and CME enjoys near monopoly like a situation of Treasury futures. Putting cash and derivatives will enable both the entity to save millions of dollar as they have to put less collateral.
NEX Group, formerly known as ICAP rebranded itself as an electronic trading after TullettPrebon bought its voice trading business for £1.3 billion ($1.6 billion) in 2016. Post the announcement of the acquisition by Bloomberg on March 15th, the shares gained almost 30 percent in the bourses.