VIX mix

26 September 2016 By Kevin Allison

The Chicago-based options exchange is paying over the odds for the NYSE competitor: the value of expected synergies falls short of covering the deal premium. But BATS’ technology is a plus for CBOE, and bulking up in equities in a consolidating industry adds extra strategic heft.

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CBOE Holdings, the parent of Chicago Board Options Exchange, said on Sept. 26 that it would buy BATS Global Markets for about $3.2 billion.

CBOE said it would pay around $32.50 in cash and stock for BATS, the latest in a string of mergers and acquisitions in the exchanges industry. CBOE specializes in derivatives, including S&P 500 Index options contracts, while BATS is the second-largest U.S. stock exchange by volume.

CBOE expects the deal to generate $50 million of cost savings after three years, rising to $65 million after five years, by cutting costs and migrating to a single trading platform.

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