Nasdaq (NDAQ) has agreed to a $1.1 billion acquisition of International Securities Exchange, the Deutsche Börse Group-owned operator of three electronic options exchanges, the U.S. financial trading company said Wednesday. The cash and debt transaction would give Nasdaq ownership of three electronic options exchanges operated by the European company: ISE, ISE Gemini and ISE Mercury. Combined, the exchanges serve as the venue for more than 15% of trading in U.S. options, Nasdaq said in its announcement after financial markets closed.
As part of the transaction, Nasdaq is expected to gain an additional 20% stake in The Options Clearing Corporation, for a total 40% stake in the world’s largest equity derivatives clearing company, and one of the largest horizontal clearinghouses. Nasdaq said the deal is expected to improve its earnings per share within 12 months of finalization. Subject to customary closing`conditions, including regulatory approvals, the transaction is expected to close in the second half of 2016, Nasdaq said.
“The equities options business has been core to our long-term strategy, and we believe an essential component to the strength of the Nasdaq franchise,” Nasdaq CEO Bob Greifeld said in a statement issued with the deal announcement. He predicted the deal would enable the company to improve trading to clients “while increasing operational efficiencies and decreasing operational costs.” Merging the options operations will generate more competitive pricing and produce at least $40 million in annualized expense cost-savings within 18 months of the deal closing, said Tom Wittman, Nasdaq executive vice president and global head of equities.
Nasdaq scheduled a Thursday investor conference call at 8:15 a.m. EDT to discuss the transaction. The deal announcement comes amid some recently announced consolidation plans for the financial exchange industry. The London Stock Exchange in February confirmed it was in talks about merging with Germany’s Deutsche Börse.