You've Got to Be BATS Not to Buy CBOE Now
- by Dan Gutierrez
- in Markets
- — Sep 27, 2016
The offer, which values the No. 2 stock exchange operator in the United States by volumes at about $32.50 per share, comes just over five months after BATS made its market debut at $22.88.
CBOE Chief Executive Edward Tilly will lead the combined company, CBOE said on Monday.
The board of directors of the company following the closing will consist of 14 members, with 11 coming from CBOE Holdings' current board and three from Bats'.
Purchasing Bats will give CBOE a "disruptive business model" as well as increase the company's leverage due to "expense rationalization and more effective balance sheet management", the firm noted.
CBOE Holdings agreed to buy Bats Global Markets, in a move that combines one exchange operator known for its product development with another that's known for its technology. CBOE, based in Chicago, is the largest US options exchange, according to its website .
Ranieri coy over Schmeichel's Porto chances
After sailing to a 3-0 victory over Club Brugges a fortnight ago, opportunity now abounds to edge closer towards qualification. They are a little scared but the referees told them the rule is the same - we can pull, but now they are scared about it.
The deal will allow CBOE Holdings to expand on its product line in all asset classes and tap into Bats' foothold in pan-European equities and global foreign exchange (FX) positions.
Each Bats share will receive $10 in cash and 0.3201 shares of CBOE.
"We feel like we can start producing shareholder value now", Chris Concannon, chief executive officer at Bats, said, responding to a question about whether Bats could have been in a position to buy CBOE or another player if it had more time to grow on its own. A representative of CBOE, founded in 1973, did not respond to a request for comment. The company intends to fund the cash portion of the consideration and the refinancing of Bats' debt through available cash and new borrowings of $1.65 billion, for which commitment letters have been obtained.
Following the close of the transaction, the Board of Directors of the combined company will consist of 14 directors, 11 of the 14 members now serving on the CBOE Holdings board, plus three members from the Bats Board of Directors.
Bats went public in April, completing an IPO four years after an error with the exchange operator's own software foiled a first attempt to go public. Sidley Austin LLP is CBOE's legal counsel.
