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Back to all Intercontinental Exchange announcements

ICE buys Creditex

IntercontinentalExchange (NYSE: ICE), a leading operator of global derivatives exchanges and over-the-counter(OTC) markets, today announced that it has entered into a definitive merger agreement to acquire Creditex Group Inc. (Creditex), a credit market leader and innovator in the execution and processing of credit default swaps (CDS) with markets spanning the U.S., Europe and Asia.

Creditex is a leader in the most liquid segments of the CDS market including CDS indexes, single-names and standardized tranches.

The transaction consideration will total $625 million comprising approximately $565 million in ICE common stock and $60 million in cash, as well as a working capital adjustment to be finalized at closing.

Approximately $50 million of the cash component is intended to provide some liquidity to employees that hold Creditex stock, and the remaining cash will be provided to unaccredited Creditex shareholders in lieu of shares of ICE common stock. Upon the closing of the transaction, expected during late third quarter 2008, Creditex Group will be a wholly-owned subsidiary of ICE, operating under the Creditex name.

“We are pleased to announce this exciting strategic combination and for the opportunity to serve the interdealer CDS market by joining with an established market leader,” said ICE’s Chairman and CEO Jeffrey C. Sprecher. “We believe that together we can meet the demand for enhanced operational and risk management tools required by dealers and their clients today. The credit derivatives sector is one of the largest segments of the OTC market, and we expect that the highly regarded team at Creditex will continue to lead with innovative solutions to ensure that liquidity and risk management tools evolve with these markets.”

“We are very excited about this transaction and look forward to the opportunities ahead in strengthening our position as a leader in CDS by partnering with ICE,” said Creditex’s Chairman and CEO Sunil Hirani.

“Our companies have common origins in supporting dealers by providing the key infrastructure required to grow their businesses. ICE clearly represents the best fit in terms of innovation, global relationships and a culture of growth, as well as having the complementary ability to meet the execution and processing needs of our dealer clients in the fast-growing CDS markets. Creditex’s products and services, together with ICE’s management team, range of OTC expertise, and post-trade infrastructure, will enhance our CDS offering to best meet the needs of our clients in this expanding marketplace.”

The transaction is expected to be accretive in 12 to 18 months from closing. Based on recent results and expected synergies, the transaction would yield $9 million to $14 million in total pretax synergies in 2009, comprising incremental revenues and expenses.