UPDATE:NYSE Euronext CEO Says More Exchanges Face Write-Downs
February 11 2009 - 4:06PM
Dow Jones News
The top executive at NYSE Euronext (NYX) warned Wednesday that
more exchanges will have to write down the value of acquisitions
after a $53 billion spending spree over the past four years.
The transatlantic exchange operator this week took a $1.59
billion non-cash charge for goodwill and other assets stemming from
the $10.2 billion merger of NYSE Group and Euronext-Liffe in
2007.
Duncan Niederauer, chief executive, said deals done over the
past two or three years could be prone to write-downs, with sector
valuations some 70% off their 52-week highs.
NYSE Euronext is the third exchange to take a goodwill charge
over the past week following write-downs by CME Group Inc. (CME)
and IntercontinentalExchange Inc. (ICE), with sector valuations
some 70% below their 52-week highs.
"Frankly, we think there are other exchanges that are going to
have to address similar concerns," said Niederauer at the company's
investor day.
"We thought it was better to deal with it sooner rather than
later."
Niederauer didn't identify any particular exchanges, though CME
and Nasdaq OMX Group Inc. (NDAQ) have been the most prolific
acquirers over the past four years.
Exchange valuations peaked at the end of 2007 before sliding
amid a broad pullback in financial stocks and slowing growth,
notably in the derivatives segment that drove much of the M&A
activity.
Valuations peaked with the 2007 acquisition of the International
Securities Exchange by Eurex, the derivatives operator co-owned by
Deutsche Boerse AG (DB1.XE) and SWX Swiss Exchange.
The deal valued the U.S. options exchange at 47.1 times forward
earnings, but a number of other transactions carried multiples of
between 30 and 40, according to Goldman Sachs.
Exchanges have spent $53 billion on rivals and other trading and
technology platforms since 2004, according to research by Dow Jones
Newswires.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com