NEX Group Share News (NXG)

LONDON (Alliance News) - NEX Group PLC and CME Group Inc said Thursday they have agreed to a takeover of NEX by CME in a deal valuing the UK markets infrastructure firm at GBP3.90 billion.

CME has offered 500 pence in cash as well as 0.0444 of a new CME share for every NEX share held. Based on CME's closing share price on Wednesday of USD158.84, this values the deal at 1,000p per share.

The offer price represents a 49.2% premium to NEX's closing share price on March 15, being the day prior to the offer period beginning.

Shares in NEX were 0.3% higher at 975.00p in early trading Thursday. This was after the stock closed up 10% on Wednesday, when NEX confirmed an offer was being made.

CME said it believes it can extract USD200 million in cost synergies from the deal. These are anticipated to be achieved by the end of 2021, assuming completion in 2018. To achieve these synergies the company expects a one-off costs of USD285 million.

Cross-selling opportunities are also expected to help drive revenue growth for the combined group. CME expects the acquisition to be accretive to earnings by 2019.

"The combination of NEX and CME will be an industry-changing transaction," NEX Chief Executive Officer Michael Spencer said. "Bringing together cash and futures products and OTC services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets. The technology and innovation opportunities will be diverse and extraordinary. Clients will be better served."

After the transaction, CME will retain it headquarters in Chicago but will maintain its European base in London. Spencer will join the CME board.

"CME's decision to choose London as its European headquarters is also a signal of tremendous support for Britain's financial services sector", Spencer added.

CME Chair & Chief Executive Officer Terry Duffy added: "At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, the acquisition will allow us to create significant value and efficiencies for our clients globally. As one organisation, we will be able to employ the complementary strengths of each company, while diversifying our combined businesses across futures, cash and OTC [over-the-counter] products and post-trade services."

NEX earlier in March confirmed it had received a preliminary takeover approach by CME.

ICAP - now known as NEX Group - and Tullett Prebon in June 2016 agreed for Tulett to acquire the ICAP voice broking and information business. The deal was completed at the end of December 2016.

CME Group is a US-based options and futures exchange operator, with a market capitalisation of around USD54.50 billion.