TMX Group has entered a definitive agreement to make a strategic investment in exchange operator and market technology provider, MEMX.
Jonathan Kellner
The transaction will create a consolidated US exchange group valued at $2.3 billion, with TMX Group holding an approximate 59% ownership interest in the combined business.
The integration is expected to boost both firms’ positioning in the US listed options market, as well as provide liquidity for MEMX’s existing equity holders.
The move also sees US equities options market BOX being combined with MEMX.
Funding for the strategic combination spans approximately $800 million in cash from majority owner TMX Group, as well as a contribution of BOX’s stake.
The offering is also supported by key MEMX and BOX participants, who are contributing equity into the new combined group.
The combined company will be led by Jonathan Kellner, chief executive of MEMX, who said: “Bringing BOX’s unique electronic and open outcry trading functionality to MEMX’s price time and pro-rata exchanges provides enhanced customer functionality and the ability to compete across all of the US options exchange models.
“Further, this strategic transaction allows us to continue to grow and diversify by developing new products and services with greater scale across our organisation.”
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Specifically, the combined company will operate three US listed options exchanges, an equities exchange and a technology business providing market technology and operational support for other market centres.
The integrated offering will continue to function independently following completion of the transaction.
“This new combination brings together the complementary strengths of two innovative and competitive US venues to advance the development of new solutions across both options and equities, and creates a more formidable exchange group, well-positioned to capitalise on expansion opportunities,” said John McKenzie, chief executive of TMX Group.
“For TMX, this transaction is consistent with our purpose to make markets better and empower bold ideas, and fits squarely with our strategy to accelerate global growth and create value for our shareholders.”