IntercontinentalExchange (NYSE: ICE) has agreed to acquire Climate Exchange plc, the British operator of emissions trading markets in Europe and Chicago, for about $600 million.
Climate Exchange operates the European Climate Exchange (ECX), the Chicago Climate Exchange (NYSEARCA:CCX) and the Chicago Climate Futures Exchange (CCFE).
Under the terms of the acquisition, Climate Exchange shareholders will receive 7.50 pounds ($11.44) in cash for each share held on April 30. The Associated Press reported the price was about a 57% premium on Climate Exchanges closing price on April 30.
ICE acquired a 4.8% stake in Climate Exchange on June 22, 2009 for 6.45 pounds a share. The companies have worked together on an electronic trading platform since 2003.
The acquisition will include $220 million that has been drawn from ICE's existing credit facilities for these purposes and the remainder from existing cash resources.
CCX launched in 2003, and currently has nearly 300 members that make a legally binding commitment to meet annual GHG emission reduction targets. The US does not currently mandate carbon emissions trading, but if it ever does, the CCX is well situated to benefit.
In 2008, New Energy Finance estimated the global carbon market could grow to more than $1 trillion by 2020, if the US adopts a cap-and-trade program
Climate Exchange is expected to add to ICE's earnings in 2011, though it is likely to lower them slightly for the remainder of this year, ICE said.
The deal is expected to close at the end of July 2010.
"The combination of Climate Exchange's emissions markets and ICE's futures and OTC energymarkets 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," said ICE Chairman and CEO Jeffrey C. Sprecher.
IntercontinentalExchange is based in Atlanta, Georgia.
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