Intercontinental Exchange (NYSE:ICE) today confirmed rumors, first voiced yesterday, that it intends to acquire NYSE Euronext (UNKNOWN:UNKNOWN). In a press release issued this morning, ICE announced that it has agreed to pay $33.12 per share to acquire the outstanding shares of NYSE. That deal is valued at $8.2 billion.
According to the companies, the merger will combine "two leading exchange groups to create a premier global exchange operator diversified across markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates."
The terms of the deal permit NYSE Euronext shareholders to accept consideration for their shares in one of three forms:
- $33.12 in cash, per NYSE share.
- 0.2581 share of ICE, per NYSE share.
- A mix of $11.27 in cash and 0.1703 ICE share, per NYSE share.
There is a caveat, however, that ICE is not prepared to pay out more than $2.7 billion of the purchase price (currently estimated at $8.2 billion) in cash, or more than 42.5 million shares. The company is targeting a purchase consideration comprised approximately of 67% shares and 33% cash.
ICE says it expects to achieve $450 million in cost-saving "synergies" in the second full year post-merger, which currently looks to be calendar year 2015. ICE further expects the merger to be accretive to its earnings in an amount greater than 15% in the first year post-merger, likely 2014.
This acquisition is subject to the same regulatory approvals that have derailed similar attempted mergers in recent years. If this one is approved, the parties hope to close in the second half of 2013.
As of this writing, ICE shares are down 1.9% at $125.89; NYSE shares are up 31.9% at $31.72.
Fool contributor Rich Smith has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend NYSE Euronext. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.