ICE Tries to Bid for NYSE Euronext, Again
December 19, 2012
Intercontinental Exchange offers contracts based on European energy commodities such as Brent crude, natural gas and heating oil at its London-based ICE Futures Europe exchange. In the U.S., it offers futures on agricultural commodities such as coffee, cocoa and sugar as well as Russell stock indexes and currencies at ICE Futures U.S. The company owns the world’s largest clearinghouse for credit-default swaps, ICE Clear Credit LLC.
With more than 1,000 employees, Intercontinental earned $521.7 million in net income from revenue of $1.3 billion in 2011 when its profit margin was 39 percent. For the first nine months of the year, 87 percent of Intercontinental’s revenue came from clearing and transaction fees.
As of Sept. 30, the company had $1.24 billion in cash and cash equivalents and had issued $400 million in bonds due in 2018 and 2021, according to data compiled by Bloomberg.
Exchange executives have sought to add scale through mergers and acquisitions after the number of U.S. and European trading venues increased by about 50 in the past decade, driving down profitability. Equity-trading has also declined, with daily volume of U.S. exchange-listed securities averaging 6.44 billion shares this year, the lowest level since at least 2008, according to data compiled by Bloomberg.
Populist outcry, antitrust concern and some of the most volatile markets on record have prevented the completion of more than $32 billion in announced transactions, according to data compiled by Bloomberg on deals since October 2010 that were valued at $1 billion or more.
The 25-company Bloomberg World Exchanges Index has rallied 11 percent this year after tumbling 19 percent in 2011. The gauge of market operators averaged gains of 35 percent a year between 2003 and 2010.
Knight Capital Group Inc., pushed to the brink of bankruptcy in August by a trading error, chose this week to pursue a takeover by Getco LLC over a competing offer from Virtu Financial LLC, three people with direct knowledge of the matter said. The Chicago-based high-frequency trader offered $3.75 a share for Knight, one-third of it in stock, for a total value of $1.4 billion, according to a statement yesterday.