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ICE adds emissions trading with acquisition of Climate Exchange

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IntercontinentalExchange (ICE), the operator of regulated global futures exchanges, clearing houses and OTC markets, is to acquire Climate Exchange plc. Climate Exchange’s emissions market is expected to complement ICE’s integrated futures and OTC markets.

 

"The combination of Climate Exchange’s emissions markets and ICE’s futures and OTC energy markets is an important and logical strategic combination for our customers and shareholders, and clearly an exciting opportunity for ICE to grow and further diversify our revenues," says ICE Chairman and CEO Jeffrey C. Sprecher (pictured). "ICE has been a partner with Climate Exchange and Dr. Sandor since 2003, and we have worked together toward the development and expansion of the emissions markets. The leadership that Climate Exchange has shown in establishing market standards in Europe, and increasingly the U.S. and Asia, has driven its success, and we see continued growth opportunities within these nascent markets globally."
Climate Exchange operates the European Climate Exchange (ECX), the Chicago Climate Exchange (CCX) and the Chicago Climate Futures Exchange (CCFE).
Under the terms of the acquisition, Climate Exchange shareholders will receive 7.50 pounds Sterling in cash for each share in Climate Exchange held at today’s date, valuing the entire existing issued and to be issued share capital of Climate Exchange at approximately GBP 395 million (USD 604 million).
The transaction consideration will include USD 220 million that has been drawn from ICE’s existing credit facilities for these purposes and the remainder from existing cash resources. The transaction is expected to be accretive to earnings in 2011 is anticipated to close at the end of July 2010.
Additional details will be provided upon the completion of the transaction, at which time Climate Exchange will be a wholly-owned subsidiary of ICE, operating under the Climate Exchange’s respective brand names.
"The development of our Company from initial concept to its leadership role in global environmental markets is a tribute to the vision and efforts of our entire team. We believe that a combination with ICE makes strategic sense and look forward to addressing continued opportunities together," says Climate Exchange’s Chairman Richard Sandor. "ICE has committed to further developing the Climate Exchange businesses and building on our joint track record of innovation and success to the benefit of our customers across futures and OTC markets in Europe, Asia and the U.S."
ICE and its affiliates currently have multiple contracts in place with Climate Exchange and its affiliates to provide technology and clearing services. These contracts include a cooperation and licensing agreement whereby ICE provides an electronic trading platform and clearing to ECX for European emissions trading, a licensing technology agreement whereby ICE provides an electronic trading platform to CCX for U.S. emissions trading and a clearing services agreement whereby ICE provides clearing for CCX’s U.S. emissions markets.
Pursuant to these contracts, ICE charges fees to Climate Exchange for the services provided and shares in the revenue with respect to the trading and clearing of emissions contracts.
The transaction is subject to relevant regulatory approvals. Morgan Stanley advised ICE on the transaction and Shearman & Sterling LLP served as ICE’s legal advisor.

 

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