UK competition regulator opens inquiry into acquisition of NEX Group by CME

The UK Competition and Markets Authority (CMA) today announces the launch of an inquiry into the acquisition by CME Group Inc (NASDAQ:CME) of NEX Group PLC (LON:NXG).

The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

To assist it with this assessment, the CMA invites comments on the transaction from any interested party. The deadline for submissions is September 27, 2018.

In July this year, NEX said the acquisition remained on track. “As previously outlined, the transaction with CME remains on track to complete in the second half of the current calendar year”, said Michael Spencer, Group Chief Executive Officer of NEX.

Let’s recall that, as per the agreement, CME will pay 500 pence in cash and 0.0444 new CME shares for each NEX share, thus putting the value of each share of NEX at 1,000 pence. NEX’s entire issued and to be issued share capital is thus valued at approximately £3.9 billion. The bid represents a premium of approximately 49.2% to the Closing Price per NEX Share of 670.5 pence on 15 March 2018 (being the date the Offer Period commenced).

In addition, NEX Shareholders will be entitled to receive a final dividend for NEX in respect of the year ending March 31, 2018, such dividend not to exceed an amount of 7.65 pence per NEX Share.

On top of expected cost synergies, CME sees the deal as offering compelling revenue growth opportunities. CME will be able to market its existing product offering to NEX’s attractive customer base whilst CME will also benefit from the opportunity to cross sell NEX products.