CBOE Holdings To Buy Bats Global Markets In $3.2 Bln Deal

(RTTNews) - CBOE Holdings Inc. (CBOE) said Monday that it agreed to acquire Bats Global Markets Inc. (BATS) in a cash and stock transaction valued at about $32.50 per Bats share, or a total of about $3.2 billion, consisting of 31% cash and 69% CBOE Holdings stock, based on CBOE Holdings' closing stock price of $70.30 per share on September 23, 2016.

The per-share consideration represents a premium of 22.5% to Bats' closing stock price on September 22, 2016, the last full trading day prior to media publications regarding the potential transaction.

Within three years of the completion of the transaction, CBOE Holdings expects to realize $50 million in annualized expense synergies, increasing to about $65 million of anticipated expense synergies within five years following closing. CBOE Holdings expects to achieve these synergies by migrating to a single proprietary trading platform and optimizing the expense structure of the combined company.

The transaction is expected to be accretive to CBOE Holdings adjusted earnings per share in the first year following the completion of the transaction and deliver attractive returns on invested capital.

CBOE Holdings noted that it will fund the purchase price through a mix of stock and debt. As per the terms of the agreement, Bats stockholders will receive $10.00 per share in cash and 0.3201 of a share of CBOE Holdings common stock, representing a total consideration of approximately $32.50 per share, based on the closing price of CBOE Holdings common stock on September 23, 2016.

The merger agreement also contains an election procedure allowing each Bats stockholder to seek all cash or all stock, subject to proration and adjustment. 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.

The transaction is subject to customary closing conditions, including the approval of the stockholders of both companies, and receipt of required regulatory clearances and approvals. Bats' and CBOE Holdings' directors and officers have signed supportive voting agreements. The transaction is expected to close in the first half of 2017.

Following the close of the transaction, Edward Tilly, CBOE Holdings CEO, will remain CEO of the combined company. Chris Concannon, Bats CEO, will become President and COO, succeeding Edward Provost, CBOE Holdings President and COO, who plans to retire at that time. Chris Isaacson, Bats CIO, will succeed Gerald T. O'Connell as CIO, who also plans to retire at that time. CBOE Holdings CFO Alan Dean will remain as CFO of the combined company.

Following the close of the transaction, the Board of Directors of the combined company will consist of 14 directors, 11 of the 14 members currently serving on the CBOE Holdings board, plus three members from the Bats Board of Directors. These changes will be effective immediately upon closing.

The combined company's corporate headquarters will be located in Chicago, with business offices in Kansas City, New York and London, as well as presences in San Francisco, Singapore and Quito, Ecuador.