CME CME Group Inc

Yesterday, NYSE Euronext Inc. (NYX) announced the closure of the acquisition of Tokyo-based Metabit, which offers high quality market access products through more than 140 trading firms across Japan and Asia. However, the terms and financials of the deal were not disclosed.

On August 1, 2011, NYSE had announced that it had entered into an agreement to purchase Metabit. Accordingly, the company’s NYSE Technologies portfolio will absorb Metabit that will operate as a product line.

The market access technology of Metabit is diverse and connects buy-side order flow with sell-side exchange participants. Further, Metabit is well known for its enhanced and exclusive low latency direct market access and exchange connectivity to markets throughout the Asia-Pacific region. The market access solutions are particularly designed to meet the requirements of the Asian markets and hence offer specialized benefits to its clients.

While merger with the globally leading exchange operator is expected to maximize Metabit’s efficiencies and spread its global reach, we believe that the acquisition of Metabit also complements the market access portfolio of NYSE. Additionally, the deal also matches the company’s strategy of expanding its geographical footprint. Of late, NYSE has been looking for a strategic deal in the eastern hemisphere and acquisition of Metabit fulfils NYSE’s long-term growth goals, primarily as a technology solutions provider.

As the proposed merger with Deutsche Borse is expected to make NYSE the leading exchange giant in both the US and Europe, strategic deals like that of Metabit are further expected to enhance its operational and competitive efficiencies against prime peers such as NASDAQ OMX group Inc. (NDAQ) and CME Group Inc. (CME).

Overall, we believe that while acquisition and proposed merger-related financial costs could weigh on NYSE for some time, the company is expected to gain strength from these deals. These tactical moves are expected to offer optimum value accretion to NYSE in the long term.

On Thursday, the shares of NYSE closed at $26.88, down 1.5%, reflecting the ongoing slowdown in the markets. Thus, we are currently maintaining our Neutral stance on NYSE, supported by a Zacks #3 Rank, indicating no clear directional pressure on the stock in the near term.

 
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