Why NYSE Euronext Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NYSE Euronext (UNKNOWN: NYX.DL  ) surged 32% today after commodities exchange player IntercontinentalExchange (NYSE: ICE  ) agreed to acquire the New York Stock Exchange owner for about $8 billion.

So what: The cash-and-stock acquisition values NYSE Euronext at $33.12 per share and represents a 37% premium to its closing price on Wednesday. ICE is making the move to give it a strategic edge over main rival CME Group (NASDAQ: CME  ) -- NYSE also owns derivatives market Liffe -- and to gain cost synergies, but given its own stock's 3% drop today, Wall Street isn't thrilled with the price being paid to do it.

Now what: The deal, in which NYSE Euronext shareholders can chose either $33.12 in cash, 0.2581 ICE shares, or a combination of both, is expected to close in the second half of next year. "We believe the combined company will be better positioned to compete and serve customers across a broad range of asset classes by uniting our global brands, expertise and infrastructure," ICE Chairman and CEO Jeffrey Sprecher said . So while NYSE Euronext shares are likely all popped out at this point, ICE's bolstered competitive position and efficiency might help drive outsized gains over the long-term.

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  • Report this Comment On December 20, 2012, at 1:26 PM, StarWitchDoctor wrote:

    I got caught short on NYX and long CME. What a drag. Things happen.

  • Report this Comment On December 20, 2012, at 1:59 PM, MonkeyFish912 wrote:

    Is there a chance this will be an antitrust issue?

  • Report this Comment On December 20, 2012, at 5:10 PM, StarWitchDoctor wrote:

    MonkeyFish912, this is definitely something the authorities will be looking at, although my view of it is that there would be no real reduction in exchange competition.

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