Swiss financial market infrastructure operator SIX Group is selling its stake in its 50/50 Eurex derivatives exchange joint venture with Deutsche Börse, the German vertically-integrated exchange and post-trade services provider currently in the process of merging with exchange group NYSE Euronext.
A statement from SIX Group said that the move stems from a decision to focus on its core business as a supplier of infrastructure to the Swiss financial markets and on its internationalisation strategy as a pan-European service provider. Other cooperation arrangements between the two firms are unaffected.
The dissolution of the joint venture will be enacted by the payment of €295 million in cash and €295 million in shares of the combined Deutsche Börse and NYSE Euronext entity to SIX Group on 1 January 2012, two years ahead of the expiry of the existing contract between the partners.
Observing that the planned merger between Deutsche Börse and NYSE Euronext “creates new circumstances”, the statement from SIX suggests that it was not content to continue as a junior partner in running the derivatives exchange group. “SIX Group seeks to achieve a direct strategic and operational influence on businesses in its portfolio. It has a 50% holding in the share capital and a 15% share in the financial result of Eurex. What started out as a commercial venture has over the years increasingly become a financial investment,” the Zurich-based firm said.
Deutsche Börse said that the timing of the deal was driven largely by the impending completion of the merger deal with NYSE Euronext, which operates the London-based Liffe derivatives exchange as well as stock markets in New York, Paris, Amsterdam, Brussels and Lisbon.
“We are very pleased to have reached a fair agreement with our Swiss partners that positions Eurex for continued successful development,” said Deutsche Börse CEO Reto Francioni. “With this step Eurex can grow more sustainably and dynamically and contribute its strength in the combined Deutsche Börse and NYSE Euronext group. At the same time we are pleased that a valued and interesting partner will take a stake in the new combined group. This shows that the combination of Deutsche Börse and NYSE Euronext is already offering interesting possibilities for third parties to participate in this decisive move for the future of both partners.”
Other cooperation arrangements between SIX Group and Deutsche Börse – including structured products exchange Scoach and the global index provider STOXX – are apparently unaffected by the transaction.
SIX chairman Peter Gomez said, “Created a decade ago, Eurex has been a pioneer in derivatives markets globally and is arguably the most impressive success story of any cross-border merger in the exchange sector so far. With this step, we contribute to the new positioning of Eurex in the transatlantic combination.”
Deutsche Börse expects an immediate net income accretion on completion of the deal, subject to approval of both boards on 16 June. On a pro forma basis for the first quarter 2011 the transaction would have resulted in €26.1 million incremental sales revenue, €17.4 million additional EBIT (earnings before interest and tax) and a €15 million higher net income.
Evidence of potential tensions between the erstwhile joint venture partners had begun to emerge as a result of the Swiss firm's growing international strategy. SIX Securities Services, the group's post-trade securities infrastructure and services arm, already secures a substantial proportion of its revenues from cross-border clearing and settlement business. Last month, Thomas Zeeb, CEO, SIX Securities Services, told theTRADEnews.com that he expected the firm's clearing subsidiary, x-clear, to be competing for business in Tagged: exchanges