NASDAQ OMX Group to Acquire International Securities Exchange from Deutsche B?rse
Big news today from an options exchange perspective: Nasdaq announced it has agreed to acquire International Securities Exchange (ISE), an operator of three electronic options exchanges, from Deutsche B?rse Group. ISE operates three electronic options exchanges: ISE, ISE Gemini and ISE Mercury. ISE?s exchanges serve as the venues for more than 15% of trading in U.S. options.?
As part of the transaction, Nasdaq will gain an additional 20% stake in The Options Clearing Corporation, for a total of 40% ownership in the world?s largest equity derivatives clearing corporation and one of the largest horizontal clearinghouses. ISE also operates?ETF Ventures, which offers a broad range of capabilities in index development, licensing, financing, and marketing of exchange-traded products; and?Longitude, a technology that uses parimutuel principles to aggregate liquidity and produce fair and efficient prices for applications in a diverse range of industries.
Within 18 months of the deal closing, Nasdaq expects the combined organization to realize a minimum of $40 million in annualized expense synergies. Bringing these two options businesses together will result in more competitive pricing to the industry, and enhanced efficiencies to clients.
Nasdaq will acquire ISE for $1.1 billion, and intends to fund the purchase price through a mix of debt and cash on hand. Nasdaq does not expect the acquisition will have a material impact on Nasdaq’s financial leverage or capital return strategy.
The transaction is subject to customary closing conditions, including receipt of required regulatory approvals. The deal is currently expected to close in the second half of 2016.