CME Group Makes $5.4 billion Takeover Offer to NEX Group, Deal in Advanced Stage - The Industry Spread

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

CME Group Makes $5.4 billion Takeover Offer to NEX Group, Deal in Advanced Stage

March 30, 2018

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.

Terry Duffy, CEO of CME Group
Terry Duffy, CEO of CME Group

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.

Michael Spencer, Chief Executive Officer of NEX
Michael Spencer, Chief Executive Officer of NEX

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. 

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