ICE CEO: Acquisition Opportunities May Lie In Market Chaos
February 10 2009 - 10:36AM
Dow Jones News
IntercontinentalExchange Inc. (ICE) sees acquisition
opportunities ahead as the financial crisis has prompted private
companies to revisit their valuations, the company's chief
executive said Tuesday.
While investors have badly bruised the market capitalization of
public companies - the exchange sector itself has shed
approximately 70% over the past year - it's taken a bit longer for
the climate to affect private companies, ICE Chief Executive
Jeffrey Sprecher said Tuesday in a call discussing fourth-quarter
earnings.
"For a while, private companies that could have been acquired
had not reset their expectations" regarding valuation, Sprecher
said. "People are getting realistic now."
Sprecher said that in recent weeks, ICE has had discussions with
banks regarding borrowing capacities and the exchange's debt
positioning. "We really do see an improvement in the debt markets
right now," he said, "to an extent that we might want to tap
them."
ICE feels comfortable in its balance sheet right now, Sprecher
added, and with recent changes he's observed in private market
valuations, "that may create opportunities going forward."
ICE reported Tuesday that net income declined 24% in the fourth
quarter, following a $16 million write-down related to its stake in
the National Commodity and Derivatives Exchange of India, which has
lost market value in the wake of the global financial crisis.
Fourth-quarter net income at ICE came in at $48.9 million, or 67
cents a share, down from $64.7 million, or 90 cents a share, a year
earlier; analysts surveyed by Thomson Reuters expected earnings,
excluding items, of 83 cents on revenue of $213 million.
Futures-related transaction revenue at ICE grew by 18%
year-over-year, while global over-the-counter revenue grew 54%.
The exchange is coming off several acquisitions in 2008,
including a deal to acquire the credit derivatives boutique
Creditex in June. In October, ICE announced a plan to buy the
bank-backed Clearing Corporation as part of its plan to develop a
clearinghouse for credit default swap trades.
ICE shares were up 4.2% at $64.99 in early trading.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com
(Kerry E. Grace contributed to this report.)