FRANKFURT—Deutsche Bö rse AG said Sunday it is buying the
over-the-counter trading platform 360T for €725 million ($796.4
million) in a move that strengthens the German exchange company's
foreign-exchange operations.
Deutsche Bö rse and owners of Frankfurt-based 360T Beteiligungs
GmbH, which include the U.S. private-equity firm Summit Partners,
have signed a definitive agreement for the deal, which still awaits
regulatory approval. If approved, the deal would boost Deutsche Bö
rse's foreign-exchange, money-market and derivatives trading
business in the so-called over-the-counter market, where trading is
conducted away from exchanges. It would also potentially facilitate
handling of currency trades through the exchange group's clearing
arm.
This would be the biggest acquisition for Deutsche Bö rse since
a planned combination with NYSE Euronext failed to win antitrust
approval in Europe in 2012, and comes after new Chief Executive
Carsten Kengeter took the helm on June 1. Deutsche Bö rse's most
recent big acquisition was in 2007, when it bought U.S.-based
derivatives exchange International Securities Exchange Holdings
Inc., or ISE, for about $2.6 billion.
360T, which describes itself as professional trading venue for
foreign-exchange, money-market and derivatives products, has had
double-digit annual revenue growth since it opened in 2000. It has
subsidiaries in New York, Singapore, India and Dubai, and has been
majority owned by Summit Partners since 2012.
Several other exchange operators have been interested in buying
360T. At the end of June, the bidding was narrowed down to a small
group of companies including Deutsche Bö rse, CME Group Inc. and
Nasdaq OMX Group, according to people familiar with the talks. Most
recently, Deutsche Bö rse competed with CME Group in the bidding,
said one person familiar with the matter.
The combination is expected to generate synergies—savings and
other benefits—totaling in the double-digit millions of euros over
the medium term, through the use of Deutsche Bö rse's international
distribution network.
Deutsche Bö rse plans to finance the transaction through a
combination of debt and equity to minimize the potential impact on
its credit rating. A spokesman said more detail wasn't immediately
available, but the firm will comment further when it its releases
second-quarter earnings Monday after the market closes. Excluding
expected synergies, it expects the transaction to boost earnings
per share immediately. Including medium-term synergy goals, the
acquisition will meet customary targets for return on the
investment, Deutsche Bö rse said.
360T wasn't immediately available to comment further about the
transaction terms.
After years of deal-making dormancy, global exchanges appear to
be making a big push to compete in foreign-exchange trading. The
deal comes a few months after the U.S.-based BATS Global Markets
Inc. agreed to buy Hotspot FX, a smaller rival of 360T, for $365
million in cash plus $70 million in potential future payments. Like
Hotspot, 360T sold for more than originally expected.
The Journal previously reported a price of more than â,¬600
million had been expected.
Volatility in the market, sparked by Greece's potential exit
from the euro bloc and a potential shift in the U.S.'s
interest-rate policies, has led to a jump in trading by
corporations that want to protect their cross-border transactions.
Brokers and speculators are trading more as well.
"This is a new frontier for global exchanges, and we would not
be surprised to see more consolidation through similar transactions
in the near future," said Alex Yavorsky, head of market structure
and technology banking at Jefferies Group LLC, which advised both
360T and Hotspot on their sales.
While currencies are still expected to trade in informal markets
off exchanges, regulators in the U.S. and Europe have moved to
require that many currency transactions be centrally cleared,
rather than negotiated bilaterally among the trading partners.
Deutsche Bö rse, like other futures exchanges, has a clearing arm
that will be able to connect to 360T's trades.
360T's network connects buyers and sellers and matches trades
between them. Its customers include both banks and brokerages, as
well as companies, many of whom aren't yet connected directly to
the big exchanges. It deals not only in physical "spot" trades but
also in derivatives such as swaps, forwards and options. Other
foreign-exchange trading platforms include Hotspot, ICAP PLC's EBS
Market, Thomson Reuters Corp.'s FXall, and State Street Corp.'s
Currenex.
Corrections & Amplifications
A previous version of this article misspelled Alex Yavorsky's
name.
Write to Ulrike Dauer at ulrike.dauer@wsj.com and Telis Demos at
telis.demos@wsj.com
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