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.
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.
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Latest Ratings for CBOE
Date | Firm | Action | From | To |
---|---|---|---|---|
Jan 2021 | Rosenblatt | Maintains | Buy | |
Jan 2021 | JP Morgan | Downgrades | Neutral | Underweight |
Nov 2020 | Rosenblatt | Maintains | Buy |
View More Analyst Ratings for CBOE
View the Latest Analyst Ratings
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