OMX to Buy Computershare's Tech Unit

STOCKHOLM—Late last week, OMX, a Stockholm-based financial exchange operator and technology provider, signed a letter of intent with Melbourne-based Computershare to acquire the Computer share Markets Technology (CMT) business, OMX officials say.

If all goes as planned, the SEK 250-million ($30.5 million) deal requires OMX to hire CMT's 65 employees in January 2006 and to consolidate the technologies of both companies. The deal is expected to be completed by the end of the year, with SEK 90 million ($11 million) paid in cash at that time, OMX officials say. "OMX complements Computershare's offering," says Markus Gerdien, head of OMX Technology, a unit within OMX. The deal also creates "opportunities for us to add and sell more products to their client base," Gerdien says.

With this acquisition, OMX expects to grow its customer base by including the 30 exchanges and central securities depository (CSD) customers CMT has worldwide. After completion of the deal, OMX will serve 50 exchanges. It also adds 25 countries to OMX's market presence.

Computershare's technology teams are based in Sydney; Calgary, Canada; New York; and London. OMX does not plan on closing down CMT's team in Sydney, where the flagship product, X-stream, is developed. X-stream is an automated trading and market management system for high-volume exchanges and markets.

"No decision has been made," says Magnus Böcker, president and CEO at OMX. "But the [Australian] team will support and strengthen other OMX products." Anna Rasin, vice president marketing and communications at OMX, adds that both companies' Sydney teams will move in together once the deal is completed. The same will happen in London and any other city where both OMX and CMT have teams.

"There is some overlap between OMX and CMT, especially on the trading system side with X-stream and Horizon," Gerdien says. Horizon is an automated trading and market management system, used primarily by Middle Eastern markets, he says. OMX officials say that they have committed themselves to support the X-stream transaction system, which is used by the SWX Swiss Exchange and the Jakarta Stock Exchange, among others.

"These trading systems could be overlapping, although OMX covers securities and CMT is focused on cash equity trading," says OMX's Rasin. "We will find a way to converge the systems because we should not have several slightly similar products." OMX Technology's major transaction systems are Click XT and Saxess. It also sells the Condico trading system for energy markets.

OMX officials decline to comment further on details concerning the integration of the two companies' technology portfolios because both parties have only signed a letter of intent. A full analysis of the situation has just begun, officials say.

An additional clause in the deal sees OMX and Computershare establishing a strategic alliance to provide services for issuers in the Nordic markets and to provide consulting services on market infrastructure issues, according to OMX officials.

OMX is not planning any further acquisitions. "But if an opportunity comes along, we will seize it," Böcker says.

OMX recently announced that it was in the process of selling its bank and brokerage business unit (DWT, Sept.26). "We are still on track to part [from the unit] at the end of Q4 this year," Böcker says, declining to provide more details on the ongoing negotiations.