Shares of NYSE Euronext were down 3.6% in early trading on Wednesday on news the company has entered into a $3 billion syndicated revolving credit facility -- prompting speculation that it might outflank Deutsche Boerse with a rival bid for the International Securities Exchange [ISE]. Deutsche Boerse announced Tuesday it will acquire the ISE for $2.8 billion in cash, or $67.50/share. The German stock exchange operator is eager to consolidate with another exchange after failed attempts to combine with Euronext and the London Stock Exchange, but analysts warn that the lack of apparent cost savings might cause shareholders to nix the deal by voting down a restructuring arrangement through which the purchase would be financed. (Shareholder approval is not required for the purchase itself.) The Deutsche Boerse deal is being done through Eurex, the company's derivatives JV with Swiss exchange SWX. If it goes through, it will create the world's biggest derivatives marketplace. Eurex is taking criticism that the 41% premium it has offered to ISE shares' Friday closing price is too high, but Eurex CEO Andreas Preuss defends the transaction as "a very strong deal with a very strong partner."
Sources: MarketWatch, MoneyCentral, Bloomberg, MSNBC
Commentary: Deutsche Boerse to Acquire International Securities Exchange for $2.8 Billion • Deutsche Borse Snaps Up the ISE: Is a 24 Hour Derivatives Market Next? • ISE Exchange May Get $2.6 Billion Bid from Deutsche Boerse -- WSJ
Stocks/ETFs to watch: International Securities Exchange Inc. (ISE). Competitors: CBOT Holdings, Inc. (BOT), Chicago Mercantile Exchange Holdings (NASDAQ:CME), Nasdaq Stock Market Inc. (NASDAQ:NDAQ), NYSE Euronext (NYSE:NYX), IntercontinentalExchange Inc. (NYSE:ICE). ETFs: PowerShares Dynamic Mid Cap Growth (PWJ), iShares Dow Jones US Broker-Dealers (NYSEARCA:IAI), PowerShares Dynamic Aggressive Growth (NYSE:PGZ), KBW Capital Markets ETF (NYSEARCA:KCE)
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