Most investors either do not know of the National Stock Exchange or they forgot about the Cincinnati Stock Exchange. This was became the first all-electronic exchange in the U.S., back in 1980. It is now being acquired by CBOE Holdings, Inc. (NASDAQ: CBOE) via its CBOE Stock Exchange unit. The world of financial exchanges continues to shrink.
The CBSX has now entered into a definitive agreement to acquire the NSX to expand the CBOE footprint. In the release, it states that the CBSX will operate the NSX as a separate exchange but it will have savings from consolidating its data systems and its business operations. While the deal is subject to SEC approval, this exchange merger is tiny compared to acquisitions and mergers in exchanges. The CME Group Inc. (NYSE: CME), NYSE Euronext, Inc. (NYSE: NYX), NASDAQ OMX Group (NASDAQ: NDAQ) and others have all made far larger acquisitions in the world of exchanges.
The CBOE offers trading in more than 7,600 equities and exchange traded funds listed on exchanges in the U.S. and the NSX has offices in Jersey City, New Jersey and in Chicago. If you look at the NSX equity trading volumes just for September, it looks as though the exchange averages more than 40 million shares per day. It noted that the September 22 trading data was 273,773 trades representing some 63,438,371 shares. The September 16 trading data showed ‘only’ 170,684 trades but with a trading volume 90,568,375 shares.
CBOE shares are down 0.5%% at $26.21 on the news today and the 52-week trading range is $19.60 to $29.77. Keep in mind that the CBOE has only been public since summer of 2010, and back then it was trading at just over $30.00 per share.
It is too soon to tell how this will alter Wall Street profit and sales targets. Thomson Reuters currently has estimates of $1.53 EPS on sales of just over $510 million for 2011, but the deal is not expected to close until the fourth quarter. The 2012 estimates are $1.74 EPS on about $557 million in sales. Thomson Reuters also has a consensus price target of almost $26.50 on the stock.
JON C. OGG
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