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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

Stock market operator Deutsche Boerse AG confirmed Monday that it is in talks to acquire the U.S.-based options exchange International Securities Exchange Holdings for US$2.8 billion (euro2.05 billion).
Such a move would give Deutsche Boerse a strong position in the U.S. options trading business, after the NYSE Group Inc. created the first trans-Atlantic stock market by beating out the German exchange operator to acquire Euronext.
"I'm not sure if anything can be considered a surprise anymore when it comes to cross-border, cross-asset exchange partnerships or acquisitions, but the move by Deutsche Boerse to acquire ISE is an interesting and bold move," said Brad Bailey, a senior analyst with financial services consulting firm Aite Group.
Deutsche Boerse shares rose 1.4 percent to euro172.55 in Frankfurt before they were suspended. ISE shares surged 41.5 percent to US$64.69 (euro47.40) in New York.
An acquisition, talks of which were first reported by The Wall Street Journal, would be at a proposed price of US$67.50 (euro49.48) per share.
The ISE, which went public in 2005, 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.
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.
The ISE was also rumored to be a possible takeover candidate by the New York Stock Exchange. The ISE's two top executives _ co-founders David Krell and Gary Katz _ used to run the NYSE's options business, and their headquarters is just around the corner from the NYSE.
Deutsche Boerse said the purchase would be made through the derivatives exchange Eurex, which is jointly owned by it and the Swiss Stock Exchange SWX. Deutsche Boerse said its supervisory board, as well as that of the SWX and the board of ISE, would decide about the transaction Monday.
With the rapid pace of consolidation in the industry, Deutsche Boerse has been on the lookout for possible partnerships after its failed bid to acquire Euronext, which has exchanges in Paris, Amsterdam, Brussels and Lisbon. It also had two offers for the London Stock Exchange rebuffed.
The London exchange fought off several other bids, including one from the Nasdaq Stock Market Inc., which is now its largest shareholder. The Nasdaq was said to have approached the Philadelphia Stock Exchange, the No. 3 U.S. options marketplace, for a possible deal earlier this month.
The Chicago Mercantile Exchange, meanwhile, is fighting rival IntercontinentalExchange for the Chicago Board of Trade in a move to create the world's largest futures exchange.
NYSE Euronext Inc. Chief Executive John Thain said he is interested in acquiring or building a larger options platform in the U.S. Its acquisition of Paris-based Euronext provided it with the London-based options market Liffe.
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On the Net:
http://www.deutscheboerse.com
http://www.iseoptions.com/


Updated : 2021-06-15 16:09 GMT+08:00