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IntercontinentalExchange Group (ICE) Acquires Trayport for $650M in Stock

November 16, 2015 7:36 AM EST

IntercontinentalExchange Group (NYSE: ICE) entered into a definitive agreement to acquire Trayport for $650 million in ICE common stock. Trayport is a subsidiary of GFI Group, which was acquired by BGC Partners (NASDAQ: BCGP) in March 2015. Trayport licenses its technology platform to serve brokers for electronic and hybrid trade execution primarily in the European over-the-counter (OTC) utility markets. The transaction will enable ICE to provide new services to the European OTC energy markets, including European power, natural gas and coal.

Based in London, Trayport will continue to serve its customers - including energy producers and consumers, brokers, exchanges and clearing houses - with its existing technology platform. As part of ICE, Trayport will offer customers access to a broader range of risk management and analytics services as the OTC markets evolve. It will benefit from ICE’s global technology infrastructure and its expertise in managing secure data. In addition, as energy markets in Asia continue to develop, ICE expects to extend the platform to support the development of these OTC markets.

"European regulators have made clear that they do not expect OTC gas and power markets to be subject to the mandatory clearing provisions that are being applied to other commodity markets. As such, these vital markets will require continued investment as part of the European energy market evolution. In addition, with ICE’s experience in managing secure technology, we are well positioned to support the continued development of these systems," said ICE Chairman and CEO Jeffrey C. Sprecher. "Consistent with our track record of bringing improvements to markets, we will invest in and enhance the Trayport offering based on evolving customer needs."

"We are pleased to take the next step in a rapidly changing European OTC utility landscape with ICE’s stability and capacity to invest in our growth," said Elliott Piggott, CEO of Trayport. "Our customer-centric platform will continue to serve the needs of the utilities market as it evolves, and we look forward to completing the transaction and advancing into our next stage of growth.”

The agreement was unanimously approved by the Boards of Directors of both companies. The transaction is expected to close in the first quarter of 2016, subject to the completion of closing conditions and receipt of applicable regulatory approvals.

Summary financial details of the transaction include:

  • The $650 million purchase price will be paid with 100% equity consideration comprising approximately 2.5 million shares1 of ICE common stock.
  • Trayport’s last twelve months (LTM) net revenues were approximately $80 million2 and LTM adjusted EBITDA3 margins were above 50%, as of September 30, 2015.
  • ICE anticipates an immaterial impact to 2016 adjusted earnings per share.

ICE’s financial advisors are Goldman, Sachs & Co. and its legal advisor is Shearman & Sterling LLP. The financial advisors to BGC Partners are Cantor Fitzgerald & Co. and its legal advisor is Wachtell, Lipton, Rosen & Katz.

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