CME To Acquire GFI Group's Fenics, Trayport Businesses - Update

(RTTNews) - Futures exchange operator CME Group Inc (CME), Wednesday agreed to acquire Fenics and Trayport businesses of GFI Group Inc (GFIG) as part of efforts to expand into the European energy and global foreign exchange markets.

Fenics is a single interface for pricing, trading, risk management and straight-through processing, while Trayport provides real-time electronic trading software for brokers, exchanges and traders in commodity, fixed income, currency and equity markets.

The deal is a two-step transaction. First, CME will acquire GFI Group for $580 million and assume $240 million in debt. Then, a consortium of GFI Group management, led by current Executive Chairman Michael Gooch and CEO Colin Heffron, will acquire GFI Group's wholesale brokerage and clearing businesses for $165 million in cash and the assumption, at closing, of about $63 million of unvested deferred compensation and other liabilities.

The $4.55 per share price that CME Group is paying for GFI represents a 46 percent premium to yesterday's closing price.

Following the announcement, GFI shares surged 43 percent on the New York Stock Exchange.

GFI will continue to operate its wholesale brokerage business as normal following the deal, but will establish long-term commercial agreements with CME around market data.

CME said the deal is expected to create significant stockholder value for both GFI and CME stockholders and to qualify as tax-free exchanges of equity for both groups.

The deal is expected to close in early 2015.

"By acquiring Trayport, a well-established business that already has a strong client base, we will both expand CME Group's involvement with European energy markets and increase operational efficiencies and trading opportunities for all European energy market participants," said CME Executive Chairman Terry Duffy.

CME is trading at $76.04, up $0.54 or 0.71%, on a volume of 726k shares on the Nasdaq.

GFIG is trading at $4.45, up $1.35 or 43.25%, on a volume of 9.3 million shares on the NYSE.