Putting Your Capital on ICE

The Euronext spinoff has whet the appetite of rivals including Nasdaq OMX (NDAQ), which have made some informal inquiries about buying Euronext. The Journal article quoted Nasdaq CEO Robert Griefeld that he'd like to examine Euronext if it were put up for sale.

You're beginning to catch my drift. When a shareholder buys shares of either NYX or ICE they're getting, in essence, the benefits of all the lucrative parts of both companies. Let's take a look at how the stock prices of each have fared in the past year. NYX data by YCharts

Both companies have had a lovely ride, especially in the last couple of months as the good news about the purchase of the bigger company by the smaller company has caused shares to percolate. Now let's look at the "kicker" that may especially benefit shareholders of NYX.

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NYX has estimated its Euronext business has created close to $560 million in revenue in the 12 months ending Sept. 30. NYX is cutting costs and the company also plans to refinance its debt, saving $15 million this year and $24 million in 2014, CFO Michael Geltzeiler said on the company's earnings call.

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The Euronext side of NYX's business has an approximate pretax operating margin of 25%. So the "kicker" is to launch an initial public offering of Euronext sometime after the closing of the ICE purchase. The value of the Euronext business could be as high as $1.39 billion. Shareholders of NYX would eventually receive an undisclosed number of shares of Euronext in this scenario. Details are still pending.

During the earnings call NYX's Niederauer stated, "We certainly see further upside for investors from revenue synergies. Any IPO of Euronext would occur as soon after the close as practical, but as you would expect our focus right now is on the approval process for the merger."

Niederauer will be president of the combined company after the merger. Neither he nor the CFO said anything about changing the dividend payout of NYX, which currently has a yield-to-price of 3.41%. Shareholders will be reaping a sweet reward while they wait for what's ahead for both NYX and ICE.

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