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Nasdaq and ICE presentation on NYSE Euronext deal cost savings

Nasdaq and ICE presentation on NYSE Euronext deal cost savings

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Published by DealBook
Presentation by Nasdaq and ICE about the potential cost savings of their deal -- and the failures of NYSE Euronext to realize synergies in the original deal that created the company.
Presentation by Nasdaq and ICE about the potential cost savings of their deal -- and the failures of NYSE Euronext to realize synergies in the original deal that created the company.

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Categories:Business/Law, Finance
Published by: DealBook on Apr 25, 2011
Copyright:Attribution Non-commercial

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05/27/2012

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
 
INET
Fastest and most scalable trading platform on the planet
 
has become theestablished industry standard
Improved latency, increased functionality, better reliability and competitive pricing
Fast and seamless integration
 
consolidated 3 trading systems onto 1 technologyplatform in 9 months.
Accretion in less than one year 
OMX
Successful acquisition of Nordic and Baltic markets
Improved market structure through introduction of central counterparty clearing andimplementation of INET platform
 
cash trading turnover increased 27% comparedwith 15% for Euronext
(1)
Combined INET platform with next Genium to deliver next generation of exchangetechnology
Retained local character of individual markets, respectful of local governance andheritage
Exceeded $100M of promised expense synergies in only 10 months, 14 monthsahead of schedule
PHLX
Accretive within first quarter of closing the deal
Growth in market share of U.S. equity options
 
from 15% to 30%
Migrated to INET trading platform
$65M in expense synergies within 9 months, significantly ahead of target
(1) Reflects electronic order book turnover From Q109 to Q410
 
2
The Promise The RealityDelivery ofSynergies
"NASDAQ has extensive experience in integrating
technologies and businesses and we will be able to
seamlessly integrate PHLX with the NASDAQ Stock Market."
-- Nasdaq Press Release, 7 November 2007 

the PHLX and OMX acquisitions aretracking significantly ahead of schedule. Management movedforward its accretion targets for both transactions to 4Q08and 1Q09, respectively.
 
-- Jeffries & Co. Analyst Note, August 2008 
IntegrationExecution

with the ability to grow and accelerate the global flow of 
equity capital. At the same time, it provides us with anexcellent platform for further expansion into derivatives and

 
-- Nasdaq / OMX Press Release, 25 May 2007 

given the superior scalability of its operating platform and
maintain much higher operating margins than its major 

 
-- William Blair & Co. Analyst Note, June 2009 
ExecutionPerformance

revenue and the expense side for the large deals and we'redoing what we do well, and that is to focus on the operationand the execution of the business plan, and that's what we're

 
-- Bob Greifeld,
Financial Times 
View from the TopInterview, 11 March 2008

strength for NASDAQ. As the company realizes deal-relatedcost synergies associated with its recent and upcomingacquisitions we expect the company will experiencesignificant margin expansion back toward the levels

 
-- Credit Suisse, June 2008 

 
-- Forbes Company of the Year: Nasdaq, by Daniel Fisher, 18 December 2008 

Successful M&A Track Record
Fulfilling and surpassing expectations
 
3
NYSE

Integration History
Synergies
$275M in expense synergies targeted in 3 years
 
 

 
$100M in promised revenue synergies never realized
Declining EPS &Margins
From 2007 to 2010:
 
Revenues are off 9%
 
Operating Income is down 25%
 
Net Income decreased 22%
 
Margins declined from 40% to 33 %
ValueDestruction
$1.6 billion impairment charge taken in Q408 toreflect failure to deliver promised returns for acquisition
-25%-22%22%33%
-30%-20%-10%0%10%20%30%40%Operating IncomeNet Income
Operating Income & Net IncomePerformance2007 vs. 2010
1
NYSE EuronextNASDAQ OMX
1.Source:
NASDAQ OMX results; company website: ir.nasdaq.com. 2007 reflects pro forma non-GAAP results and are adjusted to include the results of OMX and PHLX for the period reported, and excludescertain items that are non-recurring in nature. 2010 reflects non-GAAP results and excludes certain items that are non-recurring in nature.
NYSE Euronext : 2007 results reflect pro forma non-GAAP results reported in earnings release dated February 5, 2008. 2010 results reflect non-GAAP results reported in earnings release datedFebruary 8, 2011

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