NEW YORK (TheStreet) -- Shares of CBOE (CBOE) - Get Report were falling on heavy trading volume late Monday afternoon late after the company said it would buy exchange operator Bats Global Markets for $3.2 billion.
CBOE, a Chicago-based markets operator, will pay 31% of the deal price in cash and the rest in stock.
The company said the deal with Bats would expand its product line, strengthen its global position with Bats' pan-European equities and global foreign exchange positions and diversify its business.
The deal is expected to close in the first half of 2017.
Wells Fargo said today that the acquisition could "create considerable shareholder value" for CBOE, the Fly reports.
Purchasing Bats will give CBOE a "disruptive business model" as well as increase the company's leverage due to "expense rationalization and more effective balance sheet management," the firm noted.
CBOE will also be better-positioned to bid for larger deals with Bats, Wells Fargo said. The firm added that any multiple compression after the transaction will be offset by accretion.
Wells Fargo has a "market perform" rating on CBOE shares, according to the Fly. More than 2.48 million shares of CBOE have traded so far on Monday vs. the 30-day average volume of about 431,000 shares.
Separately, TheStreet Ratings objectively rated CBOE stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of A-.
The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in net income, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
You can view the full analysis from the report here: CBOE