CBOE To Acquire Bats Global

The Chicago-based options exchange is about to enter the world of ETFs through Bats.

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Reviewed by: Cinthia Murphy
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Edited by: Cinthia Murphy

The Chicago Board Options Exchange (CBOE) operator, CBOE Holdings, is acquiring Bats Global Markets for $3.2 billion, in a deal that would bring together the largest options exchange in the world with the fastest-growing ETF exchange.

The CBOE runs open outcry pits in the Midwest, while Bats was created entirely based on the latest technology and electronic trading capabilities. Ed Tilly, CEO of CBOE, characterized both companies as “fast-growing, innovative.”

“Whenever I’m asked what might prompt CBOE to do a significant merger or acquisition, I’ve always said it would be a company that offers complementary strengths, and one that looks like ours in terms of compelling growth rates and a culture of innovation,” Tilly said in a webcast.

“The acquisition brings together Bats’ proven proprietary technology infrastructure, global ETP trading and listing venues, and global foreign exchange marketplace and market data services with CBOE’s product innovation, indexing expertise and options and volatility market position,” he added.

New Executive Lineup

Once merged, Tilly will remain CEO of CBOE, but Bat’s CEO Chris Concannon will become president and chief operation officer of CBOE, taking Ed Provost’s place, who will be retiring, according to the company. Chris Isaacson, chief information officer of Bats, will become CIO of CBOE.

According to Bloomberg, the companies expect the merger to allow for “annual cost synergies of $50 million within three years of the transaction’s completion,” and “$65 million within five years.” The deal should close in early 2017.

“Throughout our 10-year history, Bats has sought to Make Markets Better for customers, and we believe this transaction meshes perfectly with that mission,” Concannon said in a note to customers. “We will be strongly positioned to compete more vigorously than ever before in all the markets in which we operate, and at an even greater scale, and at even more benefit to our customers.”

Bats, which owns ETF.com, went public in April. The exchange’s stock price is up more than 65% since its IPO, trading Monday at $31.80 a share.

The exchange will be headquartered in Chicago, and will maintain offices in Kansas City, New York and London.

Contact Cinthia Murphy at [email protected]

 

Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer for etf.com, specializing in ETF content and multimedia. Cinthia’s experience includes time at Dow Jones and former BridgeNews, covering commodity futures markets in Chicago and Brazil equities in Sao Paulo. She has a bachelor’s degree in journalism from the University of Missouri-Columbia.