CME Group is to acquire NEX Group in a deal valued at USD5.4 billion. CME Group will pay GBP10 per share – a premium of around 3 per cent to the stock’s closing price on 28 March – consisting of 500 pence in cash and 0.0444 CME Group shares.
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.
This deal brings together two trading-industry heavyweights to create a global markets company offering futures, cash and OTC marketplaces.
The companies believe that combining NEX’s 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 OTC post-trade products and services complement CME Group’s derivatives clearing services, and 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.
“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,” says CME Group Chairman and Chief Executive Officer Terry Duffy (pictured). “As one organisation, 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 organisation that is at the centre 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 US 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.
Spencer says: “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,” says Spencer.
