Thursday 23 May 2019

Nex shares soar on takeover approach from US giant CME

Shares rose by more than 30% in morning trading.

Nex Group shares rose following a takeover approach from America's CME (PA)
Nex Group shares rose following a takeover approach from America's CME (PA)

By Ben Woods, Press Association

Shares in electronic trading firm Nex Group rocketed on Friday after the group confirmed that it has been approached by US giant CME over a possible takeover.

Nex, which specialises in wholesale trading, is headed by Michael Spencer, the former Conservative Party treasurer.

The FTSE 250 firm has a market capitalisation north of £3 billion and any deal would see Mr Spencer, who holds 17% in Nex, net a bumper payout.

Shares rose by more than 30% on the second tier to 901p in morning trading on the London Stock Exchange.

CME Group confirmed the takeover approach and said it is undertaking due diligence to determine whether a firm offer can be made.

However, it cautioned that there can be “no certainty that any firm offer will ultimately be made”.

“CME takes a disciplined approach to acquisitions with clearly defined strategic and financial objectives and an offer, if any, would have to meet these objectives,” the firm said.

According to UK takeover rules, CME must make a firm offer or walk away by April 12.

Shore Capital analyst Paul McGinnis said: “While the possibility of a bid for Nex has been openly discussed ever since the disposal of the Global Broking division to the now-renamed TP ICAP, we have continually struggled with the economics from the viewpoint of an acquirer.

“Since the disposal was completed in December 2016, Nex has lost a CFO and issued a profit warning.

“Nex has set stretching medium term targets, to grow revenue at 7-10% per annum and improve operating margins to over 40%.

“This means the bid economics improve as we head towards year end March 2020.”

Nex said on Thursday after the market closed that it has “received a preliminary approach” from CME, the US-based derivatives trader.

It is thought that CME’s approach could also see rivals players such as Deutsche Borse, Intercontinental Exchange and SGX make a play for Nex.

Press Association

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