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 Deutsche Boerse said late on Wednesday that it was set to book a
disposal gain in the high triple-digit millions of euros from
selling ISE, having written it down continuously since acquiring it
for $2.8 billion in 2007.
The German exchange's shareholders could benefit through an extra
dividend or share buyback, analysts at brokerage Equinet said,
adding that Deutsche Boerse would have additional cash to increase
its LSE offer in the event of a takeover battle for the British
company.
Intercontinental Exchange <ICE.N> said this month that it might make
a rival offer for LSE.
People familiar with the merger talks between Deutsche Boerse and
its European peer cautioned that money is not the only consideration
in that deal.
While an enhanced offer may help to win over shareholders, such a
step may make it harder to secure political backing in London
because it would change the character of the deal from a merger of
equals to a takeover by Deutsche Boerse, they said.
Deutsche Boerse Chief Executive Carsten Kengeter has said he has
alternatives if the LSE merger does not go through, adding that it
is unclear whether counter-bidders really want to buy LSE or want to
weaken competitors by forcing them to pay more.
STRETCHING ITS LEAD
ISE operates three electronic options exchanges, which together
account for more than 15 percent of U.S. volumes, while Nasdaq
operates another three. Combined, Nasdaq would command more than 40
percent of the market, extending its lead as the No.1 U.S. options
exchange operator.
"The ability to further that lead gives us advantages as to how we
could serve our customers because you have a different
volume-versus-scale arrangement," Nasdaq Chief Executive Bob
Greifeld said in an interview.
The deal would also free up capital for Deutsche Boerse, which has
said it plans to merge with LSE to create a European trading
powerhouse that could better compete with U.S. rivals.
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Nasdaq, which plans to move ISE's trading platforms onto Nasdaq
technology, said it could strip out $40 million of costs from the
two businesses through the transaction.
The deal would also give Nasdaq an additional 20 percent of the
Options Clearing Corporation, taking its stake in the world's
largest equity derivatives clearing business to 40 percent.
Greifeld said he had been looking to buy ISE for years and that
talks with Deutsche Boerse's Kengeter picked up over the past three
months.
The deal does not include ISE's stake in No.2 U.S. stock exchange
operator BATS Global Markets or blockchain start-up Digital Asset
Holdings, which will continue to be owned by Deutsche Boerse, the
German company said.
Nasdaq, which has boosted its profit and share price through a
number of acquisitions in recent years, said the ISE transaction is
expected to be finalised in the second half of the year, pending
regulatory approval, and is likely to increase earnings within 12
months of closing.
(Additional reporting by Arno Schuetze and Andreas Kröner in
Frankfurt, Sudarshan Varadhan in Bengaluru; Editing by Lisa
Shumaker, Richard Chang and David Goodman)
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