Follow U.S. immigration and U.S. economic news: On December 20, 2012, New York Stock Exchange traders were excited to learn that the Intercontinental Exchange (ICE) would acquire the New York Stock Exchange for $8.2 billion.
A 13-year-old child is acquiring a 200-year-old grandfather—since the announcement of the Intercontinental Exchange's acquisition of the parent company of the New York Stock Exchange, this deal has become the focus of the financial world. Various signs indicate that this acquisition has entered its final stages.
"The acquisition is expected to be completed on November 4"
In late June, the European Union announced its unconditional approval of the Intercontinental Exchange's (ICE) $8.2 billion acquisition of the parent company of the New York Stock Exchange—NYSE Euronext. Since many European stock exchanges are members of NYSE Euronext, the EU has numerous laws and regulations that could be used to intervene in this acquisition to prevent potential monopolistic harm to consumers in EU countries. This unconditional approval has removed the largest obstacle for ICE to become the world's third-largest exchange group.
On August 31, Jeff Huang, Managing Director of ICE Greater China, revealed in an exclusive interview with China Economic Weekly that there would be clear progress on this acquisition in early October. On October 11, Huang stated that ICE is expected to complete the acquisition of NYSE on November 4, but did not disclose further details, indicating that ICE would not formally accept interviews during this sensitive period. On the same day, he also posted the above information on his Weibo, stating, "The acquisition is expected to be completed on November 4."
Meanwhile, on October 2, ICE updated the latest progress of this acquisition on its official website—the European regulatory authority's chair committee has issued a letter approving this transaction. The conclusion of this highly anticipated merger is nearing.
New strategies to avoid antitrust scrutiny
As early as 2011, ICE had partnered with Nasdaq to acquire NYSE but faced failure. At the end of last year, ICE announced it would acquire NYSE independently for $8.2 billion, with payment in cash and stock. After this transaction is completed, NYSE shareholders will own approximately 36% of ICE.
Industry insiders analyze that ICE's independent acquisition is not difficult to obtain regulatory approval. ICE primarily operates futures trading in commodities such as crude oil, natural gas, and cotton, while the New York Stock Exchange mainly engages in stocks, stock options, and derivatives, with minimal overlap in business. Furthermore, after the merger, the market share in the futures market would only be about 10%, a proportion that would not trigger antitrust regulations.
Indeed, this was the case. On June 3 of this year, this transaction was approved by the shareholders of both companies, and subsequently received approval from the European Commission. The U.S. Securities and Exchange Commission (SEC) also gave the green light—on August 16, a regulatory document published on its website indicated approval of ICE's acquisition of NYSE, stating that this merger complies with U.S. securities regulations.
Jeffrey Sprecher, founder and CEO of ICE, stated to the media in September that the acquisition of NYSE would be completed in the second half of this year.
Located on Wall Street, the New York Stock Exchange has been a symbol of American capitalism and synonymous with the international financial center since the 1920s. ICE was established in May 2000, headquartered in Atlanta, Georgia, USA, acquired the International Petroleum Exchange in 2001, merged with the New York Mercantile Exchange in 2007, and further merged with the Climate Exchange in 2010.
Through its electronic platform, ICE offers futures contracts trading in crude oil and related refined products, natural gas, electricity, carbon emissions, and more. In terms of raw materials, it covers cocoa, coffee, cotton, ethanol, orange juice, pulp, and sugar, and its business scope also includes currency and index futures.
A 13-year-old child acquiring a 200-year-old grandfather—this acquisition has become the focus of the financial world since its announcement. Jeff confidently stated that ICE's market value has increased, adding leverage to this acquisition. "When ICE was first listed, its market value was $600 million, and when we planned to acquire NYSE, our market value was about $22 billion."
Chen Zhanyun, Vice President of the Shanghai Investment Association and a finance professor, believes: "Although NYSE represents an old financial center, the market's rules of the game consider competitiveness more. In recent years, NYSE's operating conditions have been poor, with stock prices continuously declining, which is also the main reason why NYSE shareholders are willing to sell their shares. In contrast, ICE has seen significant profit growth in recent years, mainly due to increased trading volume in energy futures and revenue growth in credit default swap (CDS) clearing business."
Previously, in 2011, Deutsche Börse also planned to merge with NYSE, but was ultimately rejected by the EU's antitrust authority; similarly, in the first half of 2012, Nasdaq and ICE jointly attempted to acquire NYSE, but were ultimately rejected by the U.S. Department of Justice.
Professor Chen Zhanyun stated: "In this acquisition, ICE learned from last year's lessons, adopting a new approach to separate the European stock exchange from ICE, and after the acquisition, to divest the equity of the European stock exchange, thus avoiding EU scrutiny." Therefore, this acquisition has progressed smoothly without obstruction from the EU.