U.S. Divestment

Deutsche Börse’s Nasdaq Deal

Deutsche Boerse CEO Carsten Kengeter Source Alexander Heinl dpa
Carsten Kengeter, a former UBS and Goldman Sachs investment maker, still is a dealmaker.
  • Why it matters

    Why it matters

    Deutsche Börse could use the proceeds from the divestment to improve its offer for the London Stock Exchange, beating out U.S. rivals that are considering their own bid.

  • Facts


    • Deutsche Börse wants to merge with the London Stock Exchange in an all share transaction, likely creating the world’s second-largest bourse operator.
    • Atlanta-based Intercontinental Exchange, owner of NYSE, and the Chicago Mercantile Exchange could make a counterbid for LSE.
    • Deutsche Börse bought the U.S. options platform International Securities Exchange for $2.8 billion in 2007, but wrote down its value already in 2009 and 2010.
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Deutsche Börse, eyeing a merger with the London Stock Exchange, has agreed to sell its U.S. options platform International Securities Exchange for $1.1 billion to Nasdaq, exiting a market that has sharply lost value since the financial crisis and where it saw little chance of become a top player.

The sale of the U.S. operations, which Deutsche Börse bought for $2.8 billion in 2007, at the height of the financial boom, will also raise some much-needed additional cash. That could be used to improve an all-share transaction to merge with the London Stock Exchange and become the world’s second-largest trading house.

“One could conjecture that it wants to hoard cash to – when needed – raise or improve its offer,” said Dieter Hein, an analyst at research firm Fairesearch located near Frankfurt.

An improved offer might be necessary if rivals try to scupper the deal: Days after the Frankfurt-based bourse announced it was in merger talks with the LSE, Atlanta-based Intercontinental Exchange said it might make a counter offer for LSE, while Bloomberg reported last week the Chicago Mercantile Exchange was considering the same.

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