Market Overview

CBOE, Bats Deal Viewed Favorably By Jefferies

Share:
CBOE, Bats Deal Viewed Favorably By Jefferies

CBOE Holdings, Inc (NASDAQ: CBOE) announced on September 26 that it was acquiring Bats Global Markets Inc (BATS: BATS) for $3.2 billion or $32.50 per share.

Jefferies’ Daniel T. Fannon maintains a Hold rating on CBOE Holdings, with a price target of $62.

Favorable Deal

Fannon expects the deal to be about 6 percent EPS accretive in 2017 and 20 percent in 2018.

“We view this deal favorably as it likely creates the industry's strongest low-cost competitor, and provides CBOE an international platform to expand upon,” the analyst mentioned.

Related Link: CBOE Buying Bats Makes Sense, Just Not Strategically

CBOE Holdings intends to finance $1 billion of the total deal amount via debt, with the rest $2.2 billion being paid through equity.

The company will also assume about $650 million of debt from BATS as part of the deal, leading to pro-forma debt of $1.65 billion.

“In the meantime, CBOE is suspending share repurchases but is leaving the dividend intact,” Fannon stated.

Cost Synergies

The acquisition is expected to close by mid-2017, with CBOE expected $50 million in cost synergies within three years of the deal closing and $65 million within five years of the deal closing.

“We believe there is limited regulatory risk to the deal. Outside of multiple-listed options on equities and ETFs, there is little competitive overlap,” the analyst explained.

The combined entity would have about 30 percent market share in the multiply-listed options business.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for CBOE

DateFirmActionFromTo
Jan 2021RosenblattMaintainsBuy
Jan 2021JP MorganDowngradesNeutralUnderweight
Nov 2020RosenblattMaintainsBuy

View More Analyst Ratings for CBOE
View the Latest Analyst Ratings

 

Related Articles (CBOE + BATS)

View Comments and Join the Discussion!

Posted-In: Daniel T. Fannon JefferiesAnalyst Color M&A News Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
GSCitigroupMaintains370.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com