NYSE Euronext (NYSE/Euronext: NYX) today announced the signing of a definitive agreement to acquire Wombat Financial Software (Wombat), a privately held global leader in high-performance financial market data management solutions. This strategic acquisition broadens NYSE Euronext’s offering of comprehensive market-agnostic connectivity, transaction and data management solutions to customers globally by integrating Wombat’s industry leading and rapidly growing market data enterprise software and services with the NYSE TransactToolsSM connectivity and messaging business.
Under terms of the agreement, NYSE Euronext will acquire 100% of Wombat for $200 million in cash consideration, and will also create a retention pool for employees. This transaction, which was unanimously approved by the NYSE Euronext Board of Directors, is expected to close early second quarter 2008, and will be accretive to NYSE Euronext’s 2009 earnings.
“Wombat is a technology innovator and world leader in market data management solutions, and we welcome the addition of the company’s entrepreneurial management team and employees to NYSE Euronext,” said Duncan L. Niederauer, NYSE Euronext CEO. “Wombat bridges our commercial technology and market data strategies, broadening our customer reach and enabling NYSE Euronext to deliver advanced technology solutions to our customers’ increasing data management challenges.”
“Our mission to become a leader in the global market data, messaging and trading technology sectors has been a driving force for the last five years,” said Danny Moore, Wombat CEO. “Synergies with TransactTools and other NYSE Euronext businesses will allow us to dramatically accelerate the growth of our value proposition; plus deliver software and services into a much broader customer base.”
"By leveraging Wombat’s low latency market data solutions, we've been able to accelerate the build-out of our global electronic trading and risk capabilities,” said Rohit D'Souza, global head of Equities and Alternative Investments at Merrill Lynch, which owned a minority equity stake in Wombat prior to this transaction. "With quote and trade traffic ever increasing, sub-millisecond latency combined with the ability to process this data in real time is important for next generation trading systems,” he added.
Larry Leibowitz, NYSE Euronext Head of Global Technology, added, “Consistent with our goal of providing the best-of-breed technology products for electronic trading, we have now added the market-leading platform for high-performance data management and distribution. By integrating Wombat’s sophisticated data platform with TransactTools’ leading connectivity and messaging infrastructure, we’ll be able to offer customers a very efficient end-to-end solution to access markets globally.”
Solutions will be delivered both as enterprise software products and as managed services on the NYSE TransactTools Secure Financial Transaction Infrastructure (SFTI) network, ranging from hosting co-location for high-speed trading, direct market access (DMA) connectivity and algorithmic execution, and new data products such as integrated and consolidated price feeds. This will significantly reduce the cost and complexity associated with building and managing connectivity for electronic trading.
The NYSE Euronext acquisition of Wombat provides for a number of additional synergies, benefits and opportunities:
• By adding market-leading data management software to NYSE Euronext’s array of commercial products, the company will be able to integrate and link the messaging and data platforms to offer new solutions for smart order routing, risk management, DMA and other applications;
• Customer solutions will be delivered as enterprise software products or as managed services on the NYSE TransactTools SFTI network, yielding a more accurate and faster-turning feedback loop on customer needs;
• Customers will be offered efficient ways to monitor and control their data use and support their administrative tasks;
• By providing efficient, low latency solutions in high volume data environments, customers will gain improved access to increasingly fragmented, high speed and electronic market models which are emerging as a result of regulatory changes such as MIFID and Reg NMS;
• This comprehensive suite of products and services will serve to eliminate cost and complexity associated with building and managing connectivity for trading and market-information infrastructures.
Wombat, which was founded in 1997 and has offices in the U.S., U.K. and Japan, is an industry leader in high-performance ticker plant and electronic trading infrastructure solutions. The company offers a high speed market data and messaging platform with direct connection to markets that facilitates large volume, low latency data management and integration. It serves over 100 customers worldwide including all top 12 of the world’s largest financial institutions and currently employs approximately 140 people. In 2007, Wombat’s revenues grew 124% to $28 million, with EBITDA margins in excess of 35%.
NYSE Euronext was represented in this transaction by Citi Markets and Banking and Crowell & Moring LLP. Wombat was represented by FT Partners (Financial Technology Partners LP and FTP Securities LLC) and by DLA Piper US LLP.
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