Bats Global Markets (BATS) to be acquired by CBOE for $3.2 billion

Bats Global Markets (BATS) to be acquired by Chicago Board Option Exchange (CBOE) for $3.2 billion or $32.50 per share.  (9/26/16)

  

CBOE, the operator of the largest options exchange in the United States by volume, said it would buy Bats Global Markets for about $3.2 billion, just over five months after BATS made its market debut.

CBOE's cash-and stock offer values BATS, the No. 2 stock exchange operator in the United States, at about $32.50 per share, a premium of 2.2 percent to BATS closing price on Friday.

Next trading day, 9/26/16

CBOE Chief Executive Edward Tilly will lead the combined company, CBOE said on Monday.

The 43-year-old Chicago Board Options Exchange runs pits where humans trade contracts, while Bats Global Markets is a fully electronic stock market.

Bats went public in April at $19.
Bats has quickly become a major player in the ETF-listings business.

Chicago-based CBOE was founded in 1973

Buying Bats would push CBOE beyond options and related futures contracts, a niche -- albeit a profitable one for the company -- compared with the areas where Bats does business. Bats is the second-biggest exchange operator in U.S. stocks, the largest in European equities and last year got into the $5.1-trillion-a-day currencies industry.

The two companies have vastly different roots. Lenexa, Kansas-based Bats was founded in 2005 by high-speed trader David Cummings of Tradebot Systems Inc., and its trading software is regarded as among the industry’s best. CBOE still runs open-outcry pits in Chicago, a throwback to an era when humans instead of computers drove trading -- though it does run the all-electronic C2 exchange, too. Bats runs a relatively lean operation because it operates in commoditized businesses, whereas CBOE enjoys monopolies in two key products: S&P 500 and VIX options.

The talks between CBOE and Bats come as two of the world’s biggest exchanges, Deutsche Boerse and London Stock Exchange Group Plc, try to combine.

Organization and Leadership 
Following the close of the transaction, Edward T. Tilly, CBOE Holdings CEO, will remain CEO of the combined company.  Chris Concannon, Bats CEO, will become President and COO, succeeding Edward L. Provost, CBOE Holdings President and COO, who plans to retire at that time.  Chris Isaacson, Bats CIO, will succeed Gerald T. O'Connell as CIO, who also plans to retire at that time.  CBOE Holdings CFO Alan J. Dean will remain as CFO of the combined company.

Following the close of the transaction, the Board of Directors of the combined company will consist of 14 directors, 11 of the 14 members currently serving on the CBOE Holdings board, plus three members from the Bats Board of Directors.  These changes will be effective immediately upon closing.

The combined company's corporate headquarters will be located in Chicago, with business offices in Kansas City, New York and London, as well as presences in San Francisco, Singapore and Quito, Ecuador.