LONDON -- Deutsche Boerse AG, operator of the Frankfurt stock exchange, agreed to buy International Securities Exchange Holdings Inc., the second-largest US options market, for about $2.8 billion to create the largest trans-Atlantic derivatives exchange.
The price amounts to $67.50 per ISE share, Deutsche Boerse said yesterday, or 48 percent more than ISE's closing price of $45.72 on April 27. The purchase will be carried out by Deutsche Boerse's Eurex AG unit, Europe's largest derivatives exchange.
Buying New York-based ISE will give Deutsche Boerse access to the US options market, which grew last year at the fastest pace in six years as hedge funds and investors turned to derivatives to bolster returns. Deutsche Boerse chief executive Reto Francioni has been seeking partners since losing out to NYSE Group Inc. in a battle to buy Euronext NV last year.
"This move will offer Deutsche Boerse an excellent foothold into the very rapidly expanding US options market," said Brad Bailey, a former options and stock trader, now an analyst at Boston-based consulting firm Aite Group LLC.
ISE shares surged $20.97, or 45.9 percent, to $66.69 in New York Stock. Deutsche Boerse rose 1.4 percent in Frankfurt. Together the exchanges would have a combined market value of $20 billion, just shy of the $22 billion market capitalization of NYSE Euronext.
ISE will operate as a separate exchange overseen by the Securities and Exchange Commission, and will retain its "full management," current governance structure, and brand, Deutsche Boerse said.