-- Delivers streamlined access and new trading opportunities
across spot and futures FX products as well as cash, repo and
futures products in U.S. Treasuries.
-- Expands clearing offering to include other leading
post-trade services.
-- Provides consideration of £10 per share to NEX
shareholders, consisting of 500 pence
in cash and 0.0444 CME Group shares.
-- Produces $200 million in
run-rate cost synergies annually by end of 2021.
-- Expected to close in the second half of 2018.
CHICAGO and LONDON, March 29,
2018 /PRNewswire/ -- CME Group Inc. (Nasdaq: CME) and NEX
Group plc (NXG.L) today announced that they have reached an
agreement in which CME Group will acquire NEX in a transaction
valued at £10 per share, consisting of 500
pence in cash and 0.0444 CME Group shares (based on CME's
closing share price of US$158.84 on
March 28, 2018 and the exchange rate
of US$1.4101:£1, on March 28, 2018). 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 acquisition brings together two trading-industry
trailblazers to create a leading, client-centric, global markets
company that will deliver better ways to trade and manage risk
across futures, cash and OTC products.
Combining NEX's leading 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
premier OTC post-trade products and services complement CME Group's
derivatives clearing services. 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," said CME Group Chairman and Chief Executive
Officer Terry Duffy. "As one
organization, 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 organization that is at
the center 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 U.S. Treasuries," Duffy
said.
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 said, "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," Spencer
said.
Client Benefits – The transaction enhances trading and
post-trading services for clients globally:
- Delivers streamlined access and new trading opportunities
across cash, futures and OTC marketplaces.
- Enables valuable new efficiencies and risk mitigation services
through clearing and post-trade services across listed, cleared OTC
and bilateral OTC marketplaces.
- Creates timely, new fixed income opportunities as clients look
to manage risk as the Fed unwinds its balance sheet and the U.S.
budget deficit grows.
- Delivers new trading opportunities in an FX marketplace
experiencing strong tailwinds, including global GDP growth, the
return of volatility, and the continuing electronification of FX
trading globally.
- Maintains BrokerTec clearing at FICC, with a goal to increase
capital efficiencies for customers.
- Offers improved functionality and performance, combining NEX
businesses with CME Group's proven technology infrastructure.
- Scales and streamlines NEX's leading compression,
reconciliation and processing services.
- Expands market data offerings.
Growth Opportunities – The transaction is strategically
attractive and financially compelling:
- Expands CME Group's FX business beyond futures to spot
products, and broadens Treasury offering to include cash
products.
- Allows CME to introduce futures to the broad NEX user base,
particularly in FX trading.
- Increases international footprint and expands sales team and
relationship-based trading capabilities.
- Offers solutions for the full post-trade value chain, and
creates opportunities to develop new products and services to
address the continuing impact of uncleared margin rules.
- Adds recurring, subscription-based revenue to CME Group
transaction-based revenue model.
Terms of the Transaction
- NEX shareholders will be entitled to receive, for each NEX
share: 500 pence in cash and 0.0444
shares of CME Group Class A common stock.
- The transaction is expected to be immediately accretive to
adjusted cash earnings per share, with run-rate cost synergies of
$200 million annually by the end of
2021, assuming deal completion in 2018.
J.P. Morgan is acting as lead financial advisor and Barclays is
acting as financial advisor to CME Group, and Skadden, Arps, Slate,
Meagher & Flom LLP is acting as CME Group's legal
advisor. Evercore and Citi are acting as financial advisors
to NEX, and Clifford Chance LLP is acting as NEX's legal
advisor.
Investor and Media Calls
An investor slide deck is now available on the Investor
Relations section of CME Group's web site at
www.cmegroup.com. CME and NEX will hold an investor call and
webcast today at 8:30 a.m. Eastern
Time / 7:30 a.m. Central Time
to discuss this announcement. A live audio webcast of the
Q&A call will be available on the Investor Relations section of
CME Group's web site. In the
United States, investors can participate by phone at
+1.800.263.8506, and outside the U.S. at +1.719.457.2615.
After the call, an archived recording will be available online and
will be accessible by phone for seven days at +1.888.203.1112 in
the U.S. and +1.719.457.0820 outside the U.S. with passcode
1872692.
The companies also will hold a media call at 9:30 a.m. Eastern Time / 8:30 Central Time. Journalists can
participate in the United States
by calling +1.888.417.2254 and internationally by dialing
+1.719.457.2656.
About CME Group
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity
indexes, foreign exchange, energy, agricultural
products and metals. Around the world, CME Group
brings buyers and sellers together through its CME Globex®
electronic trading platform. CME Group also operates one of
the world's leading central counterparty clearing providers
through CME Clearing, which offers clearing and settlement
services across asset classes for exchange-traded and
over-the-counter derivatives. CME Group products and services
ensure that businesses around the world can effectively manage risk
and achieve growth.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex and E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT, Chicago Board of
Trade, KCBT and Kansas City Board
of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. Dow Jones, Dow Jones Industrial Average,
S&P 500 and S&P are service and/or trademarks of Dow Jones
Trademark Holdings LLC, Standard & Poor's Financial Services
LLC and S&P/Dow Jones Indices LLC, as the case may be, and have
been licensed for use by Chicago Mercantile Exchange Inc. All
other trademarks are the property of their respective
owners.
About NEX
NEX offers customers better ways to execute trades and
manage risk. Our products and services underpin the entire trade
lifecycle pre-, during and post-execution. Our electronic trading
platforms are industry standards. Customers use our lifecycle
management and information services to optimise portfolios, control
risk and reduce costs. We partner with emerging technology
companies to bring greater efficiency, transparency and scale to
the world's capital markets. NEX is headquartered in London with offices worldwide. NEX. Empowering
markets. For more information, go to www.nex.com.
Forward looking statements
This Press Release contains certain forward-looking
statements with respect to CME Group, NEX and combined
company. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts. Forward-looking statements often use words such as
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "aim", "will", "may", "would", "could" or
"should" or other words of similar meaning or the negative
thereof. Forward-looking statements include statements
relating to the following: (i) future capital expenditures,
expenses, revenues, economic performance, synergies, financial
conditions, market growth, dividend policy, losses and future
prospects; (ii) business and management strategies and the
expansion and growth of the operations of the CME Group or NEX; and
(iii) the effects of government regulation on the business of the
CME Group or NEX.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of CME Group of NEX, any such
person, or industry results, to be materially different from any
results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements
are based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which
each will operate in the future. These forward-looking
statements are based largely on the expectations of CME Group and
NEX and are subject to a number of risks and uncertainties.
These include, but are not limited to, the ability to obtain
required regulatory approvals and the approval of NEX shareholders;
the ability to achieve the expected cost savings, synergies and
other expected strategic benefits from the transaction within the
time frames indicated; the integration of NEX with CME Group's
operations may not be successful or may be delayed or may be more
costly than expected; general industry and market conditions;
general domestic and international economic conditions; and
governmental laws and regulations affecting domestic and foreign
operations.
All subsequent oral or written forward-looking statements
attributable to CME Group, NEX, the combined company or any persons
acting on their behalf are expressly qualified in their entirety by
the cautionary statement above. Neither CME Group nor NEX
undertakes any obligation to update publicly or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent legally
required.
The form 10-K of CME Group for the year ended December 31, 2017 contains additional information
regarding forward-looking statements with respect to CME
Group.
CME-G