Blog Coverage Bats Global on a Revival Spree as CBOE Announces Merger

LONDON, UK / ACCESSWIRE / September 27, 2016 / Active Wall St. blog coverage looks at the headline from CBOE Holdings, Inc. (NASDAQ: CBOE). CBOE Holdings, Inc. and Bats Global Markets, Inc. made a unified announcement on September 26, 2016, under which a definitive agreement has been achieved and has been approved unanimously by the Board of Directors of each company. The deal which is expected to fetch an approximate price of $3.2 billion will be the inception of one unified platform, where technology meets conventional options trading. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The electronic trading demeanour

This acquisition between two vastly different entities on the basis of their trading practices is an indication that electronic trading is on rise against the conventional open floor trading. In 2013, according to a Wall Street Journal report, a similar deal was executed where Intercontinental Exchange acquired the NYSE as part of an $8.2 billion merger, seemingly aimed at shifting the operational base to electronic trading.

CBOE, which started trading in 1973, owing to its conventional trading practices is quite limited in its scope. This merger would bring the Bats Global worldwide reach to CBOE’s disposal where Bats Europe is the largest pan-European equities exchange by market share and value traded, according to a business insider report.

“The acquisition of Bats is expected to strengthen our position as a global leader in innovative tradable products and services, and is a transformative next step in our growth strategy,” said Edward T. Tilly, CBOE Holdings’ Chief Executive Officer, in the official press release.

CBOE, in the recent years has aimed at expanding its portfolio for a revival of its trading operations. Signs of this development were dominant when it finalised the acquisition of Livevol Inc., which offered market data services and trading analytics platforms. Yet again, this merger brings efficient technology infrastructure, trading venues, and global ETP listings to the portfolio of the largest U.S. options exchange.

Breaking down the merger

This merger, with a net worth of $3.2 billion, will be executed at approximately $32.50 per share in cash and stock according to the official press release. Bats’ stockholders would receive $10 a share in cash and 0.3201 shares of CBOE’s common stock in the deal, which is expected to be executed in 31% cash and 69% stock.

This merger would cut out the necessity for CBOE to perform a technological upgrade, as it plans to build its new portfolio on the technological infrastructure from Bats. According to WSJ, this move would elevate the savings of the unified entity by $50 million annually and within five years; it is expected to generate $65 million in savings.

The deal is still subject to shareholders and regulatory approval, and it is expected to close in the first half of 2017.

Stock Performance

CBOE Holdings’ share price finished yesterday’s trading session at $66.59, tumbling 5.28%. A total volume of 3.24 million shares exchanged hands, which was higher than the 3 months average volume of 414.85 thousand shares. The stock has advanced 5.15% and 2.62% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company has gained 3.73%. The stock is trading at a PE ratio of 25.17 and has a dividend yield of 1.50%.

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