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Germany's Deutsche Boerse in talks to buy U.S. options exchange ISE

Germany's Deutsche Boerse in talks to buy U.S. options exchange ISE

German stock exchange operator Deutsche Boerse AG confirmed Monday that it is in talks to acquire the U.S. options exchange International Securities Exchange Holdings for US$2.8 billion (euro2.05 billion).
The Deutsche Boerse statement about the potential US$67.50 (euro49.48) per share bid confirmed a Wall Street Journal report that the two were in talks, but named a price that exceeded the US$2.6 billion (euro1.91 billion) reported by the newspaper.
Deutsche Boerse shares rose 1.4 percent to euro172.55 (US$235.41) in afternoon trading, making it the third-best performer on the Frankfurt exchange.
The acquisition would make Deutsche Boerse a large player in the U.S. options trading business, since ISE is the largest options market in the U.S. for individual stocks, including stock-index options. It is the second-largest options market behind the Chicago Board Options Exchange.
Deutsche Boerse's board was expected to recommend the transaction to its supervisory board, which was also expected to make its decision later Monday.
The purchase would be made through the derivatives exchange Eurex, which is jointly owned by Deutsche Boerse and the Swiss Stock Exchange SWX.
SWX's and ISE's supervisory boards were also expected to decide on the transaction Monday.
With consolidation sweeping the industry, Deutsche Boerse has been on the lookout for possible partnerships after it lost out to the NYSE Group Inc. in a bid to acquire European exchange operator Euronext and had two offers for the London Stock Exchange rebuffed.
The LSE fought off several other bids, including one from the Nasdaq Stock Market, which is now its largest shareholder. The Chicago Mercantile Exchange is fighting rival IntercontinentalExchange for the Chicago Board of Trade in a move to create the world's largest futures exchange
Derivatives _ which encompasses options and futures _ have been growing at a faster pace than traditional stock trading. To capture this growth, many exchanges have shifted their focus toward stock options and other financial instruments.