CBOE Holdings to Buy Bats for $3.2 Billion
September 26 2016 - 8:50AM
Dow Jones News
CBOE Holdings Inc. will buy Bats Global Markets Inc. for about
$3.2 billion, the latest move in a wave of consolidation in the
exchange market.
The operator of the Chicago Board Options Exchange, the
country's largest options platform, will pay $32.50 per share in
cash and stock, a 23% premium over Bats' closing price on Thursday,
before reports that a deal might happen boosted Bats's stock. Bats
is the U.S.'s third-largest stock exchange.
CBOE buying Bats would pair two very different business—a
four-decade-old operator that still uses trading pits with a
technology-focused upstart founded in 2005—and it would give CBOE
the opportunity to diversify its business beyond options into U.S.
and European stocks as well as currency trading.
A combination would also make CBOE a bigger player in the
exchange landscape, pushing its market capitalization closer to
about $9 billion, nearer to rival Nasdaq Inc.'s $11.5 billion
value.
The deal is reminiscent of Intercontinental Exchange Inc.'s 2013
takeover of the two-century old New York Stock Exchange in that it
illustrates the rise of electronic trading and the decline of
so-called "open outcry" floor trading, which had long dominated
financial markets.
The move also comes as London Stock Exchange Group PLC and
Germany's Deutsche Bö rse have agreed to a tie-up that would leave
it, ICE and CBOE as three giant global exchange companies.
Shares of Bats rose 2.2% to $32.49 in premarket trading as CBOE
shares rose 1.9% to $71.63.
Bats went public in April in a high-stakes test of its own
exchange after it was forced to cancel its IPO four years ago when
a software bug disrupted trading shortly after its stock listed on
its own exchange. It raised $252.7 million in the IPO process, and
shares surged above the company's $19 initial offering price on
their first day of trading.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
September 26, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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