Chicago's CME makes £3.8 billion bid for Tory donor Michael Spencer's Nex Group
- Exchange group CME has made £3.8 billion offer for London interdealer broker Nex Group.
- Nex CEO Michael Spencer, who founded the business formerly known as ICAP in 1986, says the deal is "industry-changing."
- Spencer will join CME's board after the deal closes and CME will base its European headquarters in London.
LONDON - Chicago exchange group CME has announced a £3.8 billion bid for British-headquartered interbroker dealer Nex Group.
CME said on Thursday that it had reached an agreement with Nex's board to acquire the business for the equivalent of £10 per share. Shareholders will be offered £5 in cash and the remainder in CME shares.
Nex Group shares leapt on Wednesday amid speculation that a deal could be imminent.
CME said on Thursday that the acquisition "delivers streamlined access and new trading opportunities across spot and futures FX products as well as cash, repo and futures products in U.S. Treasuries," and "expands [its] clearing offering."
The deal is expected to close in the second half of this year and CME said it has identified $200 million worth of cost savings from the combined group.
CME CEO Terry Duffy said in a statement: "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.
"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."
CME Group runs a derivatives marketplace in Chicago and owns the Dow Jones Indexes.
Nex Group, formerly known as ICAP, runs markets for trading currencies and treasuries. The London-headquartered company was founded by Michael Spencer in 1986 and Spencer remains CEO of the business.
Spencer, who served as Conservative Party Treasurer from 2006 to 2010, will join CME's board after the deal closes. Spencer said the deal will be "an industry-changing transaction."
CME will base its European headquarters in London and Spencer said the decision is "a signal of tremendous support for Britain's financial services sector."
Spencer, who is already thought to be a billionaire, will see his net worth rise thanks to the CME deal. He is Nex Group's largest shareholder, with a stake of around 18%. His holding is worth around £680 million under the terms of the acquisition.
News of the deal came as the Financial Times reported that the start of the year was the biggest quarter ever for takeovers, with $1.2 trillion-worth of deals announced in the first quarter.