CME and NEX agree £3.9 billion deal to create trading powerhouse

CME Group has reached agreement on a £3.9 billion take over of the UK’s NEX Group, in a deal that promises to transform the world’s currency and sovereign debt markets.

Under the terms, CME Group will acquire NEX in a transaction valued at £10 per share, consisting of 500 pence in cash and 0.0444 CME Group shares.

Up to 750 jobs could be slashed from the combined workforce as CME expects to realise $200 million per year in cost-related synergies.

The merger will extend CME Group’s FX business beyond futures to spot products, and broaden its Treasury offering to include cash products. It will also create a post-trade business spanning the entire value chain, enabling the creation of new products and services to address the continuing impact of uncleared margin rules.

“At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally,” says CME Group chairman and CEO Terry Duffy. “As one organization, we will be able to employ the complementary strengths of each company to serve a wider client base while diversifying our combined businesses across futures, cash and OTC products and post-trade services.”

NEX Group CEO Michael Spencer will personally pocket £670 million from the deal, which is expected to close in the second half. Upon completion he will join the CME board and act as a special advisor to the combined group.

Spencer says: “The combination of NEX and CME will be an industry-changing transaction. 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.”