ICE Group Vends NYSE's Tech Unit as per Growth Plan - Analyst Blog

Moving a step ahead toward business consolidation, IntercontinentalExchange Group Inc. ICE or ICE Group announced the divestment of Wombat Financial Software to SR Labs. The value as well as terms and conditions of the deal were not disclosed. The deal is scheduled to culminate by the last quarter this year.

Wombat Financial Software is a division of NYSE Technologies, which was attained by ICE Group with the takeover of NYSE Euronext Inc. in Nov 2013. At the time of acquisition, ICE Group had planned to divest the non-core operations that were not related to the exchange business. The company is considering more divestments in this space in the near future.

Wombat Financial Software offers financial data management services globally through its various operating platforms. These include Wombat Direct Market Data Feed Handlers, DART Entitlements and Wombat Middleware. Through this global portfolio, Wombat Financial Software provides aggregated vendor feeds, market data usage and compliance analysis, reporting and rapid multi-protocol messaging services, among others.

Alongside, SR Labs has also agreed to acquire SuperFeed – a leading platform that provides direct connectivity to most of the global exchanges with reduced latency and costs to customers.

Outlook

Such divestments will also boost ICE Group's competencies to focus on enhancing trading activity, cost synergies andoperational transparency. Meanwhile, the proceeds from such divestments should help the company de-leverage its balance sheet.

Although ICE Group became the second largest global exchange after it acquired NYSE Euronext. This integration also enabled the consolidation of operations for efficient functioning of the merged company. Going forward, we also believe that the spin-off of the Euronext platform, coupled with the termination of NYSE Liffe's New York Portfolio Clearing (NYPC) operations from mid-2014 onwards, should make ICE Group a leaner, flexible and exchange-centric company.

Currently, ICE Group carries a Zacks Rank #3 (Hold). Some better-ranked financial stocks worth considering include Euronet Worldwide Inc. EEFT, Ladder Capital Corp. LADR and Xoom Corp. XOOM. All these stocks sport a Zacks Rank #1 (Strong Buy).