NYSE reveals that losses have $2.8 billion
After level months of the European regulators blocking the NYSE’s attempt to start a partnership with the German company Borse, the stock exchange is planning to accept getting sold to ICE. ICE is NYSE’S number one competitor and is based in Atlanta. Ice is planning to pay $33 per share and this considered to have a 37% premium.
NYSE shares increased by 7% yesterday and reached $31. This was good news for the company that has been suffering from losses for over a year. NYSE shares decreased till $22 in November last year. The deal will be paid for using shares and cash.
This isn’t the first time that ICE has tried to purchase NYSE or a part of it at least. During 2011, the company partnered with Nasdaq to purchase Borse for $12 billion. The bids for the Germany Company were getting very hostile to a point that the Department of Justice raised concerns about antitrust violations.
However, this time is completely different as the deal was accepted by NYSE. ICE has stated that they are planning to implement strategic alternative to NYSE and is honoured to acquire one of the most important financial companies in the history of the United States.
This deal is good news for NYSE where the company has had an extremely rough year. When regulators in the United States created rules that will foster stronger competition among financial institutions, NYSE has been suffering and this resulted in them losing most of their market stocks to electronic rivals. Some of these rivals include BATS and private trading companies also called dark pools. The reason why they are called dark pools is because they offer investors better prices along with faster execution.
Even though investors are still worried from the stock market crash that took place five years ago, trading volumes are continuously decreasing and this gave NYSE no chance to compete in any way. Last November, NYSE released their profit reports which showed that their profit decreased by almost 42%. What make things even worse is several failed mergers that even decreased the company’s value. The company tried to cut workers and decrease costs by almost $80 million but this didn’t work at all.
“This is definitely a great year for companies such as ICE,” Howard Tai, senior analyst for Aite Group, said yesterday. ICE has also benefited from the increase in energy trading that is currently taking place in electronic platforms.