TMX Group Limited (TSX: X) and Intercontinental Exchange, Inc. (ICE) (NYSE: ICE) have entered into asset exchange agreement in a total value of £750 million or CDN $1.27 billion
TMX Group will acquire Trayport Holdings Limited, and its U.S.-based affiliate, Trayport Inc. (Trayport) from Intercontinental Exchange for £550 million or CDN $931 million, including £350 million or CDN $592 million in cash. ICE will acquire Natural Gas Exchange Inc. (NGX) and Shorcan Energy Brokers Inc. from TMX Group for £200 million or CDN $339 million.
The sale of NGX and Shorcan Energy was an important component of TMX Group’s successful bid, which is part of the total consideration for the acquisition of Trayport.
In December 2015, Intercontinental Exchange acquired Trayport from BGC Partners and GFI for US $650 million. In October 2016, The UK Competition and Markets Authority (CMA) ordered ICE to divest Trayport.
CMA has approved the sale of Trayport to TMX Group. The sale of NGX and Shorcan Energy to ICE is subject to regulatory approval including approval from the Canadian Competition Bureau.
TMX and ICE anticipate closing the sale of NGX in late 2017 or early 2018. If closing of the sale of NGX and Shorcan Energy does not occur within 45 days of today then, at the election of TMX Group or ICE, the purchase of Trayport can be separated from the sale of NGX and Shorcan Energy, and the purchase of Trayport can be completed for the full price of £550 million in cash.
TMX Group and ICE have also entered into a non-binding memorandum of understanding agreeing to explore in the future further avenues for possible collaboration.
The Trayport/NGX transaction is the second between TMX Group and ICE in 2017. On April 30, 2017, ICE acquired 100% of TMX Atrium for approximately CDN $25 million (Marlin & Associates acted as exclusive strategic and financial advisor to TMX for the TMX Atrium sale).
Barclays is acting as financial advisor to TMX Group on the transactions. National Bank of Canada is providing the new committed credit facility.
“The acquisition of Trayport brings a proven team of product development, data, analytics and sales talent to TMX and immediately strengthens our global data and analytics business,” said Lou Eccleston, Chief Executive Officer, TMX Group. “From a strategic perspective, this transaction will significantly accelerate TMX’s global expansion, increase the portion of our revenue from recurring sources and enhance the portfolio of analytics products in our Market Insights business. As we look across our multi-faceted business, we see significant opportunities to leverage Trayport’s proven expertise and premier position to enable TMX to continue to thrive in today’s global marketplace.”
Founded in 1993, Trayport currently has approximately 240 employees in offices in London, New York and Singapore. Trayport will continue to license its solutions platform to serve a global client base comprised of energy commodities traders, exchanges, wholesale brokers, and central clearing counterparties (CCPs), providing price discovery, trade execution, and post-trade services.
TMX Group plans to strategically invest to support Trayport’s existing growth initiatives while also seeking ways to develop and deploy analytics and benchmark products to facilitate better trading strategies, leverage the combination of Trayport’s European leadership with TMX’s expertise in North American energy markets to create new products, and explore strategic relationships in new geographies.
photo credit: Trayport