(Updates with planned sale and 3Q detail)
NYSE Euronext (NYX) announced plans Thursday to sell a minority stake in its U.S. derivatives unit to a group of banks and traders as the exchange operator reported a 28% fall in third-quarter profit. The company said it would sell a "significant stake" in the NYSE Liffe U.S. derivatives arm to a group including hedge-fund trader Citadel Securities, Getco, UBS AG (UBS), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), though NYSE Euronext will retain control and day-to-day management.
The planned sale is the latest example of what the company called "remutalization" in the exchange sector designed to spur trading amid profound changes in the regulatory landscape. It has taken a similar path with its U.S. options arm.
The announcement was made alongside third-quarter earnings that beat market expectations. Cost cuts helped mitigate a decline in revenue attributed to sagging cash equity volume and pricing.
"We continue to see stabilization in our core businesses and significant progress on our new initiatives," NYSE Euronext Chief Executive Duncan Niederauer said in a statement.
Net profit in the third quarter dropped to $138 million, or 53 cents a share, from $192 million, or 72 cents, a year earlier on a non-GAAP (generally accepted accounting principles) basis. On a GAAP basis, latest-quarter net income was $125 million, or 48 cents a share, compared with $174 million, or 66 cents, a year earlier.
Net revenue fell nearly 14% from a year earlier to $624 million, but was up from the previous quarter, driven by turnover from the company's derivatives operations, its largest business segment. Revenue from cash markets fell 46% from the year-ago period, almost halving at its European business and sharply down in the U.S. amid fierce price competition and weak volume.
The exchange owner's third-quarter GAAP results include the impact from merger expenses and exit costs, the sale of Hugin Group BV, the sale of a stake in Brazil's BM&F Bovespa and a fair value adjustment to the stake in BIDS Holdings LP.
-By Geraldine Amiel, Dow Jones Newswires; +33 1 40171740; geraldine.amiel@dowjones.com
(Doug Cameron contributed to this article)