CBOE Agrees to Buy Bats for $3.2 Billion
The operator of the largest US options exchange looks to expand on offerings and global reach with purchase.
In separate votes, members of each exchange's board of directors unanimously voted in favor of the merger. The deal will be a cash and stock transaction, consisting of 31 percent cash and 69 percent CBOE stock, based on its closing price of $70.30 per share on Sept. 23.
The deal will allow CBOE Holdings to expand on its product line in all asset classes and tap into Bats' foothold in pan-European equities and global foreign exchange (FX) positions. CBOE will also be able to move into non-transactional revenue streams via Bats' market data offerings.
Upon the closing of the deal, which is expected to take place in the first half of 2017, Bats' proprietary trading technology will be used to migrate all trading in the combined company's markets onto a single platform.
"The acquisition of Bats is expected to strengthen our position as a global leader in innovative tradable products and services, and is a transformative next step in our growth strategy," said Edward Tilly, CBOE Holdings' CEO, in a statement. "We believe that bringing together CBOE Holdings' product innovation, indexing expertise, and options and volatility market position, with Bats' proven proprietary technology infrastructure, global ETP listing and trading venues, global foreign exchange marketplace and market data services, represents a compelling combination that should deliver significant benefits for our customers and enhanced long-term value for our stockholders. In particular, we believe the complementary nature of our respective offerings uniquely positions the combined company to provide the product set, transparency and tradability demanded by the rapidly-developing index-based investing market. Further, Bats' market data expertise will allow CBOE Holdings to develop new products using the company's index calculation capabilities."
C-Level Shakeup
Tilly will remain the CEO of the combined company. Chris Concannon, Bats CEO, will transition to president and chief operation officer, taking over for Edward Provost, CBOE Holdings president and COO, who will retire. Chris Isaacson, Bats chief information officer (CIO), will succeed Gerald O'Connell, CBOE Holdings current CIO, who will also retire.
The board of directors of the company following the closing will consist of 14 members, with 11 coming from CBOE Holdings' current board and three from Bats'. CBOE will borrow $1.65 billion to fund the deal.
CBOE anticipates realizing $50 million in annualized expense synergies within three years of the completion of the transaction. That number is expected to rise to roughly $65 million within five years of closing.
"CBOE Holdings and Bats share a culture based on the goal of efficiently utilizing innovation to better serve customers and the broader marketplace while enhancing stockholder value," Tilly said. "We expect the acquisition to enhance the trading experience by streamlining access for customers and to allow CBOE Holdings to provide greater scale, while significantly increasing operational and cost efficiencies."
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
Court case probes open-source licenses as movement stands at crossroads
The Software Freedom Conservancy’s lawsuit against TV-maker Vizio begins trial in California, raising questions about open-source licenses and the risks posed by adhering to them.
Waters Wavelength Podcast: Countdown to T+1
DTCC’s Val Wotton joins the podcast this week to discuss the impending move to T+1 in the US.
Hub to lay off 20% of staff, sources say
Hub’s CEO says this is simply a case of a startup trying to stay nimble and efficient; others say it points to deeper issues.
Fighting FAIRR: Inside the bill aiming to keep AI and algos honest
The Financial Artificial Intelligence Risk Reduction Act seeks to fix a market abuse loophole by declaring that AI algorithms do not have brains.
Waters Wrap: The rise of AI washing… and regulation washing?
The SEC recently levied fines against two investment advisors over “AI washing”. Anthony takes issue with the announcement.
This Week: Brown Brothers Harriman, BNY Mellon/Nvidia, Cboe, Eurex, and more
A summary of the latest financial technology news.
This Week: SS&C unveils T+1 preparedness scorecard; S&P/DTCC; SmartStream & more
A summary of the latest financial technology news.
The bank quant who wants to stop genAI hallucinating
Former Wells Fargo model risk chief Agus Sudjianto thinks he has found a way to validate large language models.
Most read
- Women in Technology & Data Awards 2024: All the winners and why they won
- Witad Awards 2024: Above and beyond award (vendor)—Susan Bennett, Tradeweb
- Fighting FAIRR: Inside the bill aiming to keep AI and algos honest