Offer for NEX Group plc

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

 

For immediate release

 

29 March 2018

 

RECOMMENDED ACQUISITION

 

OF

 

NEX GROUP PLC ("NEX")

 

BY

 

CME LONDON LIMITED ("BIDCO")

 

a wholly-owned subsidiary

 

of CME GROUP INC. ("CME")

 

(to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006)

 

 

Summary

 

·     The boards of CME and NEX are pleased to announce that they have reached agreement on the terms of a recommended acquisition whereby the entire issued and to be issued share capital of NEX will be acquired by Bidco (a newly-incorporated company and wholly-owned subsidiary of CME) and CME.  It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

 

·     Under the terms of the Acquisition, NEX Shareholders will be entitled to receive:

 

for each NEX Share                    500 pence in cash

 

                                                     and

 

                                                     0.0444 New CME Shares

 

·     Based on CME's closing share price of US$158.84 at 5.00 p.m. (Eastern Daylight time) and the exchange rate of US$1.4101:£1, at 4.00 p.m. (London time) on 28 March 2018 (being the last practicable date prior to this Announcement):

 

·    the terms of the Acquisition value each NEX Share at 1,000 pence per share and NEX's entire issued and to be issued share capital at approximately £3.9 billion ($5.4 billion); and

 

·    the terms of the Acquisition represent a premium of approximately:

·     49.2 per cent. to the Closing Price per NEX Share of 670.5 pence on 15 March 2018 (being the date the Offer Period commenced);

·     49.3 per cent. to the volume weighted average Closing Price per NEX Share of 670.1 pence for the one month ended on 15 March 2018 (being the date the Offer Period commenced); and

·     57.7 per cent. to the volume weighted average Closing Price per NEX Share of 634.3 pence for the three months ended on 15 March 2018 (being the date the Offer Period commenced).

 

·     In addition, the boards of CME and NEX have agreed that NEX Shareholders will be entitled to receive a final dividend for NEX in respect of the year ending 31 March 2018, such dividend not to exceed an amount of 7.65 pence per NEX Share (the "NEX Final Dividend").

 

·     The CME Board believes there is a compelling strategic and financial rationale for undertaking the Acquisition:

 

·     Unique opportunity to create a leading, client-centric, global markets company, generating significant efficiencies across futures, cash and OTC products at a time when market participants are seeking to lower their cost of trading and better manage risk.

 

·     Improves offering to customers through the complementary combination of CME's exchange-traded derivative products and NEX's OTC products.

 

·     Expands CME's international footprint and client base in EMEA and APAC.

 

·     Financially attractive for CME Shareholders because of compelling cost synergies, enhanced combined growth opportunities and the attractive standalone financial profile of NEX.

 

·    The CME Board expects the Acquisition to generate run rate cost synergies of $200 million, which are anticipated to be fully achieved by the end of 2021 (assuming completion in 2018).  In order to realise the total synergies, CME expects to incur one-time cash costs of $285 million.  Further details on cost synergies are set out in the Quantified Financial Benefits Statement in Appendix IV to this Announcement, together with the reports from KPMG, CME's reporting accountants, and J.P. Morgan and Barclays, CME's financial advisers.

 

·     In addition to expected cost synergies, there are anticipated to be compelling revenue growth opportunities. CME will be able to market its existing product offering to NEX's attractive customer base whilst CME will also benefit from the opportunity to cross sell NEX products.

 

·     The Acquisition is expected to be immediately accretive to CME's cash adjusted earnings per share from 2019 with fully phased in synergies, and is expected to meet or exceed all of CME's investment criteria.

 

·     The robust pro-forma free cash flow profile of the Combined Company will allow CME to maintain its variable dividend structure (at a more moderate level in 2018) whilst de-levering in the near term.

 

·     Following completion of the Acquisition, NEX CEO Michael Spencer will join the CME Board. He will remain with the Combined Company as a Special Adviser, working to drive the integration and continued evolution of the NEX businesses.   He also will be ambassador for the Combined Company working with key clients, regulators and officials in EMEA and Asia.

 

·     NEX's headquarters will be combined with CME's, and the Combined Company's headquarters will be located at CME's head office in Chicago. The Combined Company will also maintain its European headquarters in London.

 

·     The NEX Directors, who have been so advised by Citi and Evercore as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable.  In providing their advice to the NEX Directors, Citi and Evercore have taken into account the commercial assessments of the NEX Directors.  Citi and Evercore are providing independent financial advice to the NEX Directors for the purposes of Rule 3 of the Code.

 

·     Accordingly, the NEX Directors intend to recommend unanimously that NEX Shareholders vote in favour of the resolutions relating to the Scheme at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, that NEX Shareholders accept the Offer), as the NEX Directors have irrevocably undertaken to do in respect of their entire beneficial holdings of 63,590,827 NEX Shares, in aggregate, representing approximately 16.75 per cent. of the issued share capital of NEX as at 28 March 2018, being the last practicable date prior to this Announcement.

 

·     CME and Bidco intend to finance the cash consideration payable by Bidco to Scheme Shareholders under the terms of the Acquisition from existing cash on balance sheet and third party debt.

 

·     CME is where the world comes to manage risk. Through its exchanges, CME offers the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. CME provides electronic trading globally on its CME Globex platform. CME also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearing house, CME Clearing. CME's products and services are designed to provide businesses around the world with the means to effectively manage risk. CME also provides hosting, connectivity and customer support for electronic trading through its co-location services. The CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets. CME provides clearing and settlement services for exchange-traded contracts, as well as for cleared swaps, and provides regulatory reporting solutions for market participants through its global repository services in the United States, United Kingdom, Canada and Australia. Finally, CME offers a wide range of market data services - including live quotes, delayed quotes, market reports and a comprehensive historical data service.

 

·     NEX is a financial technology company at the centre of the global financial markets. NEX provides electronic trade execution platforms for the OTC markets and delivers transaction lifecycle management and information services to help its clients optimise their capital, mitigate their risk and reduce their operational costs. NEX partners with emerging technology companies to bring greater efficiency, transparency and scale to the world's capital markets.  Encouraging technological advancement to improve the markets, NEX invests in companies that challenge convention. NEX is a global business, serving clients in more than 50 countries, and employing almost 2,000 people, with key hubs in the U.K., U.S., Israel, Sweden and Singapore. NEX is organised into three main business lines: NEX Markets, NEX Optimisation and NEX Opportunities.

 

 

Commenting on the Acquisition, Terry Duffy, Chairman and Chief Executive Officer of CME, said:

 

"At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, the Acquisition will allow us to create significant value and efficiencies for our clients globally. As one organisation, we will be able to employ the complementary strengths of each company, while diversifying our combined businesses across futures, cash and OTC products and post-trade services.

 

Michael Spencer and his senior leadership team have built a world-class organisation that is at the center of capital markets. We are committed to maintaining the longstanding relationships NEX has with its clients and exchange and clearing house partners. Building on NEX's deep roots in Europe and Asia and CME's strong technology platform, we will transform our international profile and broaden our distribution network in spot and futures FX products as well as cash, repo and futures products in U.S. Treasuries."

 

 

Commenting on the Acquisition, Michael Spencer, Chief Executive Officer of NEX, said:

 

"The combination of NEX and CME will be an industry-changing transaction.  Bringing together cash and futures products and OTC services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets.  The technology and innovation opportunities will be diverse and extraordinary.  Clients will be better served.

 

CME's decision to choose London as its European headquarters is also a signal of tremendous support for Britain's financial services sector."

 

 

·     Save for the Permitted Dividends, if any dividend or other distribution is authorised, declared, made or paid in respect of NEX Shares on or after the date of this Announcement, each of CME and Bidco reserves the right to reduce the offer consideration by the aggregate amount of such dividend or other distribution.

 

·     It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or, if CME or Bidco elects, subject to the consent of the Panel and subject to the terms of the Co-operation Agreement, an Offer).  The Acquisition is conditional on, among other things: (i) the approval of NEX Shareholders at the Court Meeting and the passing of the resolutions by NEX Shareholders at the General Meeting; (ii) the sanction of the Scheme by the Court; (iii) approval from competition authorities in the U.K. and U.S.; and (iv) approval from regulatory authorities in the U.K., U.S., Hong Kong, Germany, Italy and Sweden.  The Acquisition does not require the approval of CME Shareholders.

 

·     The Acquisition is expected to become Effective in the second half of 2018, subject to the satisfaction (or, where applicable, waiver) of the Conditions set out in Appendix I to this Announcement.

 

·     Further details of the Acquisition will be contained in the Scheme Document which is intended to be posted to NEX Shareholders along with notices of the Court Meeting and General Meeting and the Forms of Proxy within 28 days of the date of this Announcement, unless NEX and CME otherwise agree, and the Panel consents, to a later date.  Subject to certain restrictions relating to persons resident in Restricted Jurisdictions, the Scheme Document will also be made available on CME's website at www.cmegroup.com/nex-group and NEX's website at www.nex.com/offer. 

 

 

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

 

The Acquisition will be subject to the Conditions and further terms that are set out in Appendix I, and to the full terms and conditions which will be set out in the Scheme Document.  Appendix II contains the bases and sources of certain information used in this Announcement.  Appendix III contains details of the irrevocable undertakings received in relation to the Acquisition that are referred to in this Announcement.  Appendix IV contains details and bases of belief of the anticipated quantified financial benefits of the Acquisition and of the related reports from CME's reporting accountants, KPMG, and its financial advisers, J.P. Morgan and Barclays.  Appendix V contains definitions of terms used in this Announcement. 

 

For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CME and the CME Directors.  Each of KPMG, J.P. Morgan and Barclays has given and not withdrawn its consent to the publication of its respective report in this Announcement in the form and context in which it is included.

 

Investor and media calls

 

An investor slide deck is now available on the Investor Relations section of CME's web site at www.cmegroup.com.  CME and NEX will hold an investor call and webcast today at 1.30 p.m. London Time / 8:30 a.m. Eastern Time / 7:30 a.m. Central Time to discuss this Announcement. A live audio Webcast of the Q&A call will be available on the Investor Relations section of CME's website at www.cmegroup.com. In the United States, investors can participate by phone at +1.800.263.8506, and outside the U.S. at +1.719.457.2615.  After the call, an archived recording will be available online and will be accessible by phone for seven days at +1 888.203.1112 in the U.S. and +1.719.457.0820 outside the U.S. with passcode 1872692.

 

CME and NEX will also hold a media call at 2.30 p.m. London Time / 9:30 a.m. Eastern Time / 8:30 a.m. Central Time.  Journalists can participate in the United States by calling +1.888.417.2254 and internationally by dialing +1.719.457.2656.

 

Enquiries:

 

CME

 

Anita Liskey (Media contact)                                                    +1 312 466 4613

 

Laurie Bischel (Media contact)                                                 +1 312 648 8698

 

John Peschier (Investor Relations)                                             +1 312 930 8491

 

 

J.P. Morgan (Lead financial adviser to CME and financial adviser to Bidco)

 

Anu Aiyengar                                                                           +1 888 963 5089

 

Jeremy Capstick                                                                       +44 (0) 20 7742 4000

 

Dwayne Lysaght

 

Adam Laursen

 

 

Barclays (Financial adviser to CME)

 

Joel Fleck                                                                                 +1 212 526 7000

 

Matthew Smith                                                                         +44 (0) 20 7623 2323

 

 

Edelman (PR adviser to CME)

 

John Kiely                                                                                +44 (0) 203 047 2538

 

Alex Simmons                                                                          +44 (0) 203 047 2543

 

 

 

NEX

 

Samantha Wren, CFO                                                              +44 (0) 207 818 9000

 

Alex Dee, Head of Investor Relations

 

Bryony Scragg, Head of Media Relations

 

 

Citi (Joint lead financial adviser and corporate broker to NEX)

 

Piers Davison                                                                           +44 (0) 207 986 4000

 

Jan Skarbek

 

Peter Brown (Corporate Broking)

 

 

Evercore (Joint lead financial adviser to NEX)

 

Jane Gladstone                                                                         +1 212 857 3100

 

Edward Banks                                                                          +44 (0) 207 653 6000

 

Dave Cox

 

 

Maitland (PR adviser to NEX)

 

Neil Bennett                                                                             +44 (0) 207 379 5151

 

Rebecca Mitchell                                                                      +44 (0) 7951 057351

 

 

Goldman Sachs International is also acting as a financial adviser to NEX. Clifford Chance LLP are retained as legal advisers to NEX. Skadden, Arps, Slate, Meagher & Flom are retained as legal advisers to CME.

 

Important notices relating to financial advisers

 

J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Securities plc (which conducts its U.K. investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority) ("J.P. Morgan") is acting exclusively as joint financial adviser for CME and financial adviser to Bidco and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than CME and Bidco for providing the protections afforded to the clients of J.P. Morgan, nor for providing advice in relation to any matter referred to herein.

 

Barclays Bank PLC, acting through its Investment Bank ("Barclays") (which is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority) is acting exclusively as joint financial adviser for CME and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than CME for providing the protections afforded to the clients of Barclays, nor for providing advice in relation to any matter referred to herein.

 

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the U.S. Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in NEX securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

 

Citigroup Global Markets Limited ("Citi"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting as joint lead financial adviser to NEX and for no one else in connection with matters set out in this announcement and will not be responsible to anyone other than NEX for providing the protections afforded to its clients or for providing advice in relation to matters set out in this announcement.

 

Evercore Group L.L.C. ("Evercore LLC"), which is a securities broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC") and subject to regulation by the SEC and the Financial Industry Regulatory Authority ("FINRA"), and Evercore Partners International LLP ("EPI LLP") (together with Evercore LLC, "Evercore"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting as joint lead financial adviser for NEX and no one else in connection with matters set out in this announcement, and will not be responsible to anyone other than NEX for providing the protections afforded to clients of Evercore or for providing advice in relation to matters referred to in this announcement. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract or in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with this announcement, any statement contained therein or otherwise.  Apart from the responsibilities and liabilities, if any, which may be imposed on Evercore by FSMA, or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither Evercore nor any of its affiliates accepts any responsibility or liability whatsoever for the contents of this Announcement, and no representation, express or implied, is made by it, or purported to be made on its behalf, in relation to the contents of this Announcement, including its accuracy, completeness or verification of any other statement made or purported to be made by it, or on its behalf, in connection with NEX or the matters described in this Announcement. To the fullest extent permitted by applicable law, Evercore and its affiliates accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this Announcement or any statement contained therein.

 

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for NEX and no one else in connection with the Acquisition and will not be responsible to anyone other than NEX for providing the protections afforded to clients of Goldman Sachs International or for providing advice in connection with the Acquisition or the matters described in this Announcement or any transaction or arrangement referred to herein.

 

Further information

 

This Announcement is for information purposes only and is not intended to and does not constitute, or form any part of, an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise.  The Acquisition will be made solely by the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme.  Any voting decision or response in relation to the Acquisition should be made solely on the basis of the Scheme Document.

 

This Announcement does not constitute a prospectus or a prospectus equivalent document.

 

Overseas shareholders

 

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements.  In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their NEX Shares in respect of the Scheme at the Court Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that jurisdiction.  This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside England.

 

Copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of acceptance of the Acquisition.

 

If the Acquisition is implemented by way of an Offer, the Offer may not (unless otherwise permitted by applicable law and regulation) be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

 

Further details in relation to NEX Shareholders in overseas jurisdictions will be contained in the Scheme Document.

 

Notice to U.S. investors in NEX

 

The Acquisition relates to the shares of a U.K. company and is being made by means of a scheme of arrangement provided for under Part 26 of the Companies Act. The Acquisition, implemented by way of a scheme of arrangement, is not subject to the tender offer rules or the proxy solicitation rules under the U.S. Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable to a scheme of arrangement involving a target company in the U.K. listed on the London Stock Exchange, which differ from the disclosure requirements of U.S. tender offer and proxy solicitation rules. If, in the future, CME or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Co-operation Agreement, and determines to extend the Offer into the U.S., the Acquisition will be made in compliance with applicable U.S. laws and regulations.

 

The New CME Shares to be issued pursuant to the Acquisition have not been registered under the U.S. Securities Act, and may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act. The New CME Shares to be issued pursuant to the Acquisition will be issued pursuant to the exemption from registration provided by Section 3(a)(10) under the U.S. Securities Act. If, in the future, CME or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Co-operation Agreement, or otherwise in a manner that is not exempt from the registration requirements of the U.S. Securities Act, it will file a registration statement with the SEC that will contain a prospectus with respect to the issuance of New CME Shares. In this event, NEX Shareholders and NEX ADR Holders are urged to read these documents and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information, and such documents will be available free of charge at the SEC's website at www.sec.gov or by directing a request to CME's contact for enquiries identified above.

 

Neither the SEC nor any U.S. state securities commission has approved or disapproved of the New CME Shares to be issued in connection with the Acquisition, or determined if this Announcement is accurate or complete. Any representation to the contrary is a criminal offence in the U.S..

 

The financial information included in this Announcement has been prepared in accordance with International Financial Reporting Standards (as adopted by the European Union) and thus may not be comparable to financial information of U.S. companies or companies whose financial statements are prepared in accordance with U.S. generally accepted accounting principles.

 

It may be difficult for U.S. NEX Shareholders and NEX ADR Holders to enforce their rights and any claim arising out of the U.S. federal securities laws, because NEX is located in a non-U.S. country, and some or all of its officers and directors are residents of a non-U.S. country. U.S. NEX Shareholders and NEX ADR Holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws.  Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court's judgment.

 

U.S. NEX Shareholders and NEX ADR Holders also should be aware that the transaction contemplated herein may have tax consequences in the U.S. and, that such consequences, if any, are not described herein.  U.S. NEX Shareholders and NEX ADR Holders are urged to consult with legal, tax and financial advisers in connection with making a decision regarding this transaction.

 

Forward looking statements

 

This Announcement contains certain forward-looking statements with respect to CME, Bidco, NEX and the Combined Company.  These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.  Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "aim", "will", "may", "would", "could" or "should" or other words of similar meaning or the negative thereof.  Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, synergies, financial conditions, market growth, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the operations of the CME Group or the NEX Group; and (iii) the effects of government regulation on the business of the CME Group or the NEX Group.

 

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements.  These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future.  All subsequent oral or written forward-looking statements attributable to CME, Bidco or NEX or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. None of CME, Bidco or NEX undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

 

The form 10-K of CME for the year ended 31 December 2017 contains additional information regarding forward-looking statements with respect to CME.

 

No profit forecasts or estimates

 

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per ordinary share, for CME or NEX, respectively for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ordinary share for CME or NEX, respectively.

 

Quantified Financial Benefits Statement

 

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.  As a result, the cost savings and synergies referred to in the Quantified Financial Benefits Statement may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated.  No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast or interpreted to mean that the Combined Company's earnings in the first full year following the Effective Date of the Scheme, or in any subsequent period, would necessarily match or be greater than or be less than those of NEX or CME for the relevant preceding financial period or any other period.  For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CME and the CME Directors.

 

Right to switch to an Offer

 

Each of CME and Bidco reserves the right to elect, subject to the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Acquisition by way of an Offer for the entire issued and to be issued share capital of NEX as an alternative to the Scheme.  In such an event, the Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in Appendix I to this Announcement.

 

Publication on website

 

In accordance with Rule 26.1 of the Code, a copy of this Announcement will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, at www.cmegroup.com/nex-group and www.nex.com/offer by no later than 12 noon on 30 March 2018.

 

Neither the contents of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this Announcement.

 

You will not be sent a hard copy of this Announcement unless you request one.  You may request a hard copy of this Announcement, free of charge, by contacting Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or on +44 (0) 371 664 0565. NEX Shareholders may also request that all future documents, announcements and information sent to them in relation to the Acquisition should be in hard copy form.

 

Market Abuse Regulation

 

This Announcement contains inside information for the purposes of Article 7 of MAR. Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to NEX and its securities.

 

Information relating to NEX Shareholders

 

Please be aware that addresses, electronic addresses and certain other information provided by NEX Shareholders, persons with information rights and other relevant persons for the receipt of communications from NEX may be provided to CME during the offer period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

 

Rounding

 

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

Disclosure Requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror  in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

 

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

 

For immediate release

 

29 March 2018

 

RECOMMENDED ACQUISITION

 

OF

 

NEX GROUP PLC ("NEX")

 

BY

 

CME LONDON LIMITED ("BIDCO")

 

a wholly-owned subsidiary

 

of CME GROUP INC. ("CME")

 

(to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006)

 

 

 

1.         Introduction

 

The boards of CME and NEX are pleased to announce that they have reached agreement on the terms of a recommended acquisition whereby the entire issued and to be issued share capital of NEX will be acquired by Bidco (a newly-incorporated company and wholly-owned subsidiary of CME) and CME.  It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

 

 

2.         The Acquisition

 

The Acquisition, which will be on the terms and subject to the Conditions set out below and in Appendix I, and to be set out in the Scheme Document, will be made on the following basis:

 

for each NEX Share                           500 pence in cash

 

                                                            and

 

                                                            0.0444 New CME Shares

 

Based on CME's closing share price of US$158.84 at 5.00 p.m. (Eastern Daylight time) and the exchange rate of US$1.4101:£1 at 4.00 p.m. (London time) on 28 March 2018 (being the last practicable date prior to this Announcement):

 

·      the terms of the Acquisition value each NEX Share at 1,000 pence per share and NEX's entire issued and to be issued share capital at approximately £3.9 billion ($5.4 billion); and

 

·      the terms of the Acquisition represent a premium of approximately:

 

·    49.2 per cent. to the Closing Price per NEX Share of 670.5 pence on 15 March 2018 (being the date the Offer Period commenced);

 

·    49.3 per cent. to the volume weighted average Closing Price per NEX Share of 670.1 pence for the one month ended on 15 March 2018 (being the date the Offer Period commenced); and

 

·    57.7 per cent. to the volume weighted average Closing Price per NEX Share of 634.3 pence for the three months ended on 15 March 2018 (being the date the Offer Period commenced).

 

The NEX Shares will be acquired by CME and Bidco (or their nominee) with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this Announcement or thereafter attaching thereto, including (without limitation) the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Effective Date in respect of the NEX Shares.

 

In addition, the boards of CME and NEX have agreed that NEX Shareholders will be entitled to receive a final dividend for NEX in respect of the year ending 31 March 2018, such dividend not to exceed an amount of 7.65 pence per NEX Share (the "NEX Final Dividend").  In the event that the Effective Date occurs prior to the date of NEX's 2018 annual general meeting (currently expected to be in July 2018), the NEX Board intends to declare the NEX Final Dividend as a second interim dividend for the relevant period. In addition, if prior to the Effective Date, CME declares a dividend other than in respect of its regular four quarterly dividends (a "CME Special Dividend"), then NEX will also be entitled to declare and pay, by way of a special dividend, an amount per NEX Share equal to 0.0444 times the CME Special Dividend, multiplied by the exchange rate for the conversion of U.S. dollars into pounds sterling derived from WM/Reuters as at 4.00 p.m. (London time) on the ex-dividend date of the CME Special Dividend (the "NEX Special Dividend") .

 

Save for the Permitted Dividends, if any dividend or other distribution in respect of the NEX Shares is authorised, declared, paid or made on or after the date of this Announcement, each of CME and Bidco reserves the right to reduce the consideration payable for each NEX Share under the terms of the Acquisition by the amount per NEX Share of such dividend or distribution.

 

 

3.         Background to and reasons for the Acquisition

 

The CME Board believes there is a compelling strategic and financial rationale for undertaking the Acquisition:

 

Unique opportunity to create a leading, client-centric, global markets company, generating significant efficiencies across futures, cash and OTC products at a time when market participants are seeking to lower their cost of trading and better manage risk

 

·    The Acquisition combines CME, the most diverse derivatives marketplace, with NEX's electronic FX and fixed income cash execution platforms, EBS and BrokerTec, and OTC post-trade services.

 

·    EBS is a leading electronic trading platform within the approximately $5 trillion cash FX market, a market which is expected to benefit from increased volatility and rising interest rate differentials as the global economy moves beyond financial crisis era monetary policy. In addition, the growth of Asian currencies within the world financial system and increased electronification are also expected to increase the average cash FX volume traded.

 

·    BrokerTec is a leading electronic trading platform for cash fixed income products, particularly U.S. Treasuries. The U.S. Treasuries market is positioned to benefit from a favourable macro environment with the ongoing unwind of the U.S. Federal Reserve balance sheet and more normalised monetary policy.

 

·    The Acquisition is driven in part by CME's desire to acquire both EBS and BrokerTec, given the opportunity to streamline access to these adjacent platforms and CME's listed fixed income and FX derivatives products.

 

·    The continued trend towards increased regulatory requirements through initiatives such as MiFID II and Uncleared Margin Rules is increasing compliance costs and collateral requirements for OTC market participants, and increasing demand for post-trade solutions such as those provided by NEX Optimisation.

 

Improves offering to customers through the complementary combination of CME's exchange-traded derivative products and NEX's OTC products

 

·    The scale and liquidity of NEX's trading platforms combined with the capital efficiencies and risk mitigation enabled by NEX's post-trade services make NEX highly complementary to, and aligned with, CME's goal of helping businesses efficiently manage risk.

 

·    CME will be committed to maintaining and further strengthening the valued relationships with NEX's leading customers and exchange and clearing house partners. These relationships have supported the development and growth of NEX's offerings to date and will continue to underpin the growth of the NEX businesses going forward. In particular, BrokerTec clearing will be maintained at FICC, with a goal to increase capital efficiencies for customers.

 

·    At the same time, the combination will enable CME to deliver significant value to customers across the combined set of CME and NEX businesses through:

 

·    Streamlined technology and a consolidated operational infrastructure across marketplaces and post-trade services, at a time when customers are seeking cost efficiencies and the reduction of operational complexity.

 

·    Valuable new efficiencies and risk mitigation services through expansion and improved integration of clearing and post-trade services across listed, OTC cleared and bilateral OTC marketplaces, to address the continuing impact of regulatory capital costs, including uncleared margin rules.

 

·    Expanded and streamlined market data offerings based on the combination of data offerings from CME and NEX, enabling better data-driven insights for customers to manage risks and evaluate trading decisions.

 

Expands CME's international footprint and client base in EMEA and APAC  

 

·    Building on NEX's deep roots in Europe and Asia, the Acquisition transforms CME's global footprint and strengthens its distribution to a broader range of clients and geographies.

 

·    The Acquisition is expected to increase CME's international revenue by over 35%, with more than $350 million of NEX's revenue originating outside the U.S.

 

Financially attractive for CME Shareholders because of compelling cost synergies, enhanced combined growth opportunities and the attractive standalone financial profile of NEX

 

·    The CME Board expects the Acquisition to generate run rate cost synergies of $200 million, which are anticipated to be fully achieved by the end of 2021 (assuming completion in 2018). Cost synergies are expected to be realised through centralisation and consolidation of operational functions, IT systems migration and consolidation, and removal of duplicate selling, general and administrative expenses.

 

·    In addition to expected cost synergies, there are anticipated to be compelling revenue growth opportunities. CME will be able to market its existing product offering to NEX's attractive customer base whilst CME will also benefit from the opportunity to cross sell NEX products.

 

·    The CME Board also expects incremental revenue growth to be generated from using CME's resource base and expertise to accelerate execution of NEX's existing initiatives.

 

·    NEX's standalone financial profile is highly attractive and complementary, with a high proportion of subscription based revenue compared to CME's largely transaction based revenue model.

 

·    The Acquisition is expected to be immediately accretive to CME cash adjusted earnings per share from 2019 with fully phased in synergies, and is expected to meet or exceed all of CME's investment criteria. The robust pro-forma free cash flow profile of the Combined Company will allow CME to maintain its variable dividend structure whilst de-levering in the near term.  CME expects to maintain its medium term target debt to EBITDA level of 1.0x and minimum cash target of $700 million, and expects to return to approximately current leverage levels within two years of completion of the Acquisition. Over time, the Acquisition will increase CME's ability to return capital to CME Shareholders.

 

 

4.         Financial Benefits of the Acquisition

 

The Acquisition is expected to create significant value through cost synergies of $200 million, on a run rate basis by the end of 2021 (assuming completion in 2018), and new revenue growth opportunities

 

The Combined Company expects to create significant value through centralisation and consolidation of operational functions, IT systems migration and consolidation, and removal of duplicate selling, general and administrative expenses.

 

CME has a strong track record of creating shareholder value from complex transactions and delivering synergies whilst successfully growing its core business and retaining talent.

 

The CME Board, having reviewed and analysed the potential benefits of the Acquisition, based on its experience and the analysis completed and presented by management, expects that the Acquisition will deliver annualised run rate cost synergies of $200 million by the end of 2021 (assuming completion in 2018).  These savings are in addition to the annual cost savings of £40 million from the transformation programme previously announced by NEX, which are expected to be achieved in full in 2020.

 

Other than the NEX-announced transformation plan cost savings, these synergies are expected to arise as a direct result of the Acquisition and could not be achieved independently of the Acquisition.

 

These cost synergies are divided among and would be realised principally from:

 

a)    Centralisation and consolidation of operational functions, accounting for approximately 20% of the recurring cost synergies:

 

•     streamlining of operational support required for the trading platforms and post-trade services; and

 

•     scale efficiencies across common businesses.

 

b)    IT systems migration and consolidation, accounting for a further approximately 35% of the recurring cost synergies:

 

•     harmonisation of technology infrastructure across the Combined Company; and

 

•     centralisation and removal of duplicate IT functions.

 

c)    Removal of duplicate selling, general and administrative expenses, accounting for the remaining approximately 45% of the recurring cost synergies:

 

•     streamlining of support and service functions and corporate systems; and

 

•     removal of duplication of services.

 

The total expected run rate cost synergies of $200 million per annum are equivalent to approximately 12.5% of the Combined Company's 2017 adjusted operating costs of approximately $1.6 billion.

 

It is expected that synergy and savings realisation will take place progressively, whereby approximately 25% of the run rate cost synergies would be realised by the end of year 1, rising to approximately 55% by the end of year 2 and 100% by the end of year 3.

 

In order to realise the total synergies, CME expects to incur one-time cash costs of $285 million. Of this, approximately $60 million will be capital investment to facilitate the migration of IT systems and for consolidation of facilities.

 

Dis-synergies have been considered in quantifying the net impact of the synergy benefits and are not expected to be material.

 

The CME Board also believes there will be significant opportunity for the Combined Company to deliver incremental revenue growth.  More specifically, the CME Board believes the Acquisition will create opportunities for revenue growth across multiple areas, including by:

 

·    using CME's resource base and expertise to accelerate execution of NEX's existing initiatives;

 

·    offering optimisation services across listed, OTC cleared and bilateral OTC marketplaces, enabling new efficiencies and risk mitigation offerings to benefit customers;

 

·    delivering streamlined access to CME's and NEX's deep liquidity in cash and futures products;

 

·    increasing CME's global reach, building on NEX's deep roots in Europe and Asia; and

 

·    providing expanded market data offerings, enabling better data-driven insights for customers to manage risks and evaluate trading decisions.

 

The paragraphs above relating to expected cost synergies constitute the "Quantified Financial Benefits Statement" for the purposes of Rule 28 of the Code.

 

Appendix IV sets out further detail on the Quantified Financial Benefits Statement, including the basis of preparation and principal assumptions, and the reports required by Rule 28.1(a) of the Code by KPMG, CME's reporting accountant, and by J.P. Morgan and Barclays, CME's financial advisers.  References in this Announcement to the Quantified Financial Benefits Statement should be read in conjunction with Appendix IV.

 

 

5.         Recommendation

 

The NEX Directors, who have been so advised by Citi and Evercore as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable.  In providing its advice to the NEX Directors, Citi and Evercore have taken into account the commercial assessments of the NEX Directors.  Citi and Evercore are providing independent financial advice to the NEX Directors for the purposes of Rule 3 of the Code.

 

Accordingly, the NEX Directors intend to recommend unanimously that NEX Shareholders vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer), as they have irrevocably committed to do in respect of their entire beneficial holdings of 63,590,827 NEX Shares, representing approximately 16.75 per cent. of NEX's issued share capital as at 28 March 2018, being the last practicable date prior to this Announcement.

 

 

6.         Background to and reasons for the recommendation

 

Intercapital plc was founded by Michael Spencer in 1986 as Inter Capital Brokers Limited ("Inter Capital"). Exco plc acquired the wholesale broking operations of Inter Capital by means of a reverse takeover in October 1998 and changed its name to Intercapital plc. In 1999, the company merged with Garban Group to create Garban-Intercapital plc, the largest inter-dealer broker in the world with approximately 2,000 employees across 26 offices. Garban-Intercapital plc renamed itself ICAP plc in 2001. The ICAP group continued to grow and develop over the next 15 years, driven by acquisitions in the electronic markets and post-trade businesses, including BrokerTec in 2003, EBS in 2006, Reset in 2007, TriOptima in 2010 and Abide Financial and ENSO Financial in 2016.

 

In 2016, the ICAP group sold its voice broking business to Tullett Prebon plc, recognising the market trend towards electronic markets and the opportunities being created by regulatory change. As part of that transaction, the ICAP name was sold to Tullett Prebon plc and the remaining business was rebranded under NEX Group plc. NEX implemented a new strategy to become a financial technology business with a portfolio of leading electronic trade execution platforms (NEX Markets) and post-trade products and services (NEX Optimisation).

 

The NEX Directors remain confident in NEX's ability to deliver on its financial aspirations. Since the completion of the disposal to Tullett Prebon plc in December 2016, NEX has been focused on the execution of its strategy and delivery of growth in revenue and earnings, and has performed strongly. Despite challenging market conditions, NEX has seen robust revenue growth, a growing global business and an expanding client base, and launched a transformation programme to deliver £40m of cost savings. NEX has achieved a total shareholder return of 52.4 per cent. since the sale of its voice broking business in 2016.

 

In assessing the terms of the Acquisition, the NEX Directors considered the value and prospects of NEX's business and the potential medium term value of NEX Shares on a standalone basis, the potential financial and strategic benefits resulting from a combination of NEX and CME, and the potential prospects and value of the Combined Company. Whilst NEX has a clear strategy to deliver shareholder value and the NEX Directors believe the company would have a strong independent future, the NEX Directors consider that the Acquisition provides shareholders with value at a level which adequately recognises NEX's growth potential:

 

·    the Acquisition represents a material premium of approximately 49.2 per cent. to the Closing Price per NEX Share of 670.5 pence on 15 March 2018 (being the date the Offer Period commenced);

 

·    the Acquisition allows NEX Shareholders to crystallise a significant portion of their investment in cash;

 

·    the NEX Directors consider that the share element of the Acquisition provides an attractive opportunity for NEX Shareholders to participate in the upside from a combination with CME, including from synergies, greater scale and cross selling opportunities; and

 

·    the NEX Directors recognise the benefits of being part of a larger combined company and developing a client-centric, global markets business.

 

 

7.         Irrevocable undertakings

 

Bidco has received irrevocable undertakings to vote or procure votes in favour of the resolutions relating to the Scheme at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) from the NEX Directors, in respect of their entire beneficial holdings, amounting to 63,590,827 NEX Shares, in aggregate, representing approximately 16.75 per cent. of the issued share capital of NEX as at 28 March 2018, being the last practicable date prior to this Announcement.

 

Bidco has also received irrevocable undertakings from Michael Spencer, Samantha Wren and Ken Pigaga, also NEX Directors, to vote or procure votes in favour of the resolutions relating to the Scheme at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of any NEX Shares received by them prior to the Voting Record Time as a result of their options and awards over NEX Shares (excluding awards under tax qualifying share option plans) under the NEX Share Schemes (being 5,240,658 NEX Shares for Michael Spencer, 67,883 NEX Shares for Samantha Wren and 447,031 NEX Shares for Ken Pigaga).

 

The Irrevocable Undertakings will cease to be binding if:

 

·    the Acquisition is implemented by way of an Offer and an offer document is not sent to NEX Shareholders within the permitted period under the Code or as otherwise agreed with the Panel; or

 

·    the Scheme lapses or is withdrawn in accordance with its terms and CME or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise; or

 

·    any competing offer for the issued and to be issued ordinary share capital of NEX is made which is declared wholly unconditional (if implemented by way of a takeover offer) or otherwise becomes effective (if implemented by way of a scheme of arrangement); or

 

·    the Scheme has not become effective by 6.00 p.m. (London time) on the Long Stop Date,

 

and will remain binding if a higher competing offer is made for NEX.

 

Further details of these Irrevocable Undertakings are set out in Appendix III.

 

 

8.         Information on CME and Bidco

 

CME

 

CME is where the world comes to manage risk. Through its exchanges, CME offers the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. CME provides electronic trading globally on its CME Globex platform. CME also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearing house, CME Clearing. CME's products and services are designed to provide businesses around the world with the means to effectively manage risk. CME also provides hosting, connectivity and customer support for electronic trading through its co-location services. The CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets. CME provides clearing and settlement services for exchange-traded contracts, as well as for cleared swaps, and provides regulatory reporting solutions for market participants through its global repository services in the United States, United Kingdom, Canada and Australia. Finally, CME offers a wide range of market data services - including live quotes, delayed quotes, market reports and a comprehensive historical data service.

 

Chicago Mercantile Exchange Inc. was founded in 1898 as a not-for-profit corporation. In 2000, Chicago Mercantile Exchange Inc. demutualised and became a shareholder-owned corporation. As a consequence, Chicago Mercantile Exchange Inc. adopted a for-profit approach to its business, including strategic initiatives aimed at optimising contract volume, efficiency and liquidity. In 2002, Chicago Mercantile Exchange Holdings Inc. completed its initial public offering of its Class A common stock, which is listed on Nasdaq under the symbol "CME". In 2007, Chicago Mercantile Exchange Holdings Inc. merged with CBOT Holdings, Inc. and was renamed CME Group Inc. In connection with the merger, CME acquired the Board of Trade of the City of Chicago, Inc. ("CBOT"). CBOT is a leading marketplace for trading agricultural and U.S. Treasury futures as well as options on futures. In 2008, CME merged with NYMEX Holdings, Inc. and acquired New York Mercantile Exchange, Inc. ("NYMEX") and Commodity Exchange, Inc. ("COMEX"). On NYMEX, customers primarily trade energy futures and options contracts, including contracts for crude oil, natural gas, heating oil and gasoline. On COMEX, customers trade metal futures and options contracts, including contracts for gold, silver and copper. In 2012, CME acquired The Board of Trade of Kansas City, Missouri, Inc. ("KCBT") and its hard red winter wheat product line and effective December 2013, KCBT operations were transferred to CBOT. In April 2013, CME purchased the non-controlling interest in CME Index Services from Dow Jones & Company resulting in an increase in CME's ownership to 27% of the S&P/Dow Jones Indices LLC joint venture with S&P Global, Inc. (formerly known as McGraw-Hill), originally established in 2012. In 2013, CME began offering repository services and now offer global trade repository services in the United States, United Kingdom, Canada and Australia.

 

CME's business has historically been subject to the extensive regulation of the U.S. Commodity Futures Trading Commission. As a result of CME's global operations, it is also subject to the rules and regulations of the local jurisdictions in which it conducts business, including the European Securities and Markets Authority and the FCA. Additionally, CME's U.S. clearing house has been designated as systemically important, which carries with it enhanced regulatory oversight of certain of its risk-management standards, clearing and settlement activities, including additional oversight by the U.S. Federal Reserve.

 

CME's principal executive offices are located at 20 South Wacker Drive, Chicago, Illinois 60606.

 

Bidco

 

Bidco is a newly-incorporated English private limited company, and a direct subsidiary of CME. Bidco has been formed at the direction of CME for the purposes of implementing the Acquisition together with CME. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

 

 

9.         Information on NEX

 

NEX is a financial technology company at the centre of the global financial markets. NEX provides electronic trade execution platforms for the OTC markets and delivers transaction lifecycle management and information services to help its clients optimise their capital, mitigate their risk and reduce their operational costs.

 

NEX partners with emerging technology companies to bring greater efficiency, transparency and scale to the world's capital markets. Encouraging technological advancement to improve the markets, NEX invests in companies that challenge convention.

 

NEX is a global business, serving clients in more than 50 countries, and employing almost 2,000 people, with key hubs in the U.K., U.S., Israel, Sweden and Singapore. NEX is organised into three main business lines: NEX Markets, NEX Optimisation and NEX Opportunities.

 

NEX Markets provides electronic execution platforms and solutions in FX and fixed income products. The BrokerTec and EBS platforms offer efficient and effective trading solutions across a range of instruments including spot FX, FX forwards, U.S. Treasuries, European government bonds and E.U. and U.S. repo. These electronic platforms are built on its bespoke networks connecting participants in financial markets.

 

NEX Markets delivers solutions to the widest range of financial and professional institutions, including banks, hedge funds, asset managers, professional trading firms and corporations around the world.

 

·    Central Limit Order Books (anonymous)

·    BrokerTec: USTs, U.S. Repo, EGBs, E.U. Repo, Gilts

·    EBS Market: Spot FX, NDFs, precious metals

·    EBS Hedge: Spot FX

·    Clients: Global banks, regional banks, professional trading firms, hedge funds, central banks

 

·    Relationship-based Platforms (disclosed)

·    EBS Direct: Spot, forwards, NDFs, precious metals, options

·    EBS Select: Spot FX, NDFs, precious metals

·    BrokerTec Direct: UST actives

·    Clients: Primary dealers, global banks, regional banks, professional trading firms, hedge funds

 

·    Execution Management System (disclosed)

·    EBS Institutional: Spot, forwards, NDFs

·    Clients: Asset managers

 

·    Cash and FX Liquidity Management Centre (disclosed)

·    NEX Treasury: MMF, Spot FX, forwards

·    Clients: Treasurers

 

NEX Optimisation is dedicated to mitigating risk, increasing efficiency, reducing costs and streamlining increasingly complex processes for its clients and offers the opportunity to optimise both regulatory and financial resources. NEX Optimisation operates a number of distinct services across the transaction lifecycle:

 

·    Traiana enables global market participants to automate cross-asset risk management and pre/post-trade processing, for both listed and over the counter transactions

·    TriOptima is a provider of critical post trade infrastructure and risk management services for the OTC derivatives market

·    NEX Data delivers pricing, analytics, index and regulatory reporting solutions to a global and diverse client base providing innovative insights in pre and post trade services that enable confident trading decisions and market analysis

·    ENSO is the leading treasury and portfolio finance solution for the Hedge Fund industry with over $1 Trillion in AUA and creates a consolidation point for our client's treasury activities

·    NEX Regulatory Reporting platform, lowers costs, eliminates operational risk and provides regulatory reporting effectiveness

·    RESET is a provider of risk mitigation services that manage basis risk in trading portfolios for the derivatives marketplace

 

Clients include the sell side, buyside, central counterparty clearing houses, custodians and central securities depositories.

 

NEX Opportunities invests in financial technology companies that are transforming markets. NEX partners with pioneers who are bringing new technologies, sciences, business models, and talent to capital markets technology.

 

Investee companies include:

·    Duco

·    OpenGamma

·    RSRCHXchange

·    Axoni

·    Cloud9

·    OpenFin

·    Acadiasoft

·    Digital Asset Holdings

 

NEX was formed following the disposal of ICAP's global hybrid voice broking and information business to Tullett Prebon plc in December 2016. The ICAP name was sold to Tullett Prebon plc and the remaining business was rebranded NEX Group plc.

 

 

10.       NEX Share Schemes

 

Awards under the NEX Share Schemes will vest or lapse in accordance with the applicable scheme rules.

 

Following the Acquisition, any NEX Shares received on vesting of an award or exercise of an option will be automatically transferred to CME and Bidco for the same consideration payable under the Scheme.

 

Further detail is set out in the Co-operation Agreement.

 

Appropriate proposals will be made in due course to participants in the NEX Share Schemes. 

 

 

11.       Financing

 

CME and Bidco intend to finance the cash consideration payable by Bidco to Scheme Shareholders from existing cash on balance sheet and third party debt as described below.

 

CME has entered into a bridge facility agreement (the "Facility Agreement") with, among others, J.P. Morgan Chase Bank N.A. and Barclays, the proceeds of which will be used to fund the cash consideration payable by Bidco to Scheme Shareholders in connection with the Acquisition. CME has secured the fully committed bridge financing from J.P. Morgan Chase Bank N.A., as Joint Lead Arranger and Administrative Agent, and Barclays, as Joint Lead Arranger and Syndication Agent. Such term loan facility will mature on the date that is 364 days from the initial borrowing date thereunder, will be unsecured and will have terms similar to the existing revolving credit facility among CME, the lenders party thereto and Bank of America, N.A. as administrative agent.  It is currently contemplated that the commitments under the Facility Agreement will be reduced or refinanced with the proceeds of long-term senior unsecured debt to take place after signing and before the Effective Date.

 

J.P. Morgan is satisfied that sufficient cash resources are available to Bidco to enable it to satisfy in full the cash consideration payable to Scheme Shareholders under the terms of the Acquisition.

 

Further information on the financing of the Acquisition will be set out in the Scheme Document.

 

 

12.       Management, employees and locations of business

 

The CME Board believes that it is the ideal partner for NEX and the Acquisition will result in continued growth for the Combined Company.

 

Following completion of the Acquisition, NEX CEO Michael Spencer will join the CME Board. He will remain with the Combined Company as a Special Adviser, working to drive the integration and continued evolution of the NEX businesses.   He also will be ambassador for the Combined Company working with key clients, regulators and officials in EMEA and Asia.

 

Employees and employment rights

 

CME believes existing employees of NEX will be a key factor in maximising the opportunities and benefits the Acquisition will create for the Combined Company.  CME also believes NEX's employees will benefit from greater opportunities as a result of being part of a larger, more global group with a wider range of complementary products and technologies.

 

CME's evaluation work to identify potential synergies of the Combined Company is underway. Although ongoing, CME's work to date has confirmed there will be some duplication between the two businesses. Appropriate measures required to achieve expected synergy benefits will be assessed further following completion of the Acquisition.

 

CME anticipates a reduction in the headcount of the Combined Company of approximately 16%. The Combined Company's operations, IT, and selling, general and administrative functions are expected to be reduced in size in the first three years following completion of the Acquisition.

 

The finalisation and implementation of any workforce reductions will be subject to comprehensive planning and appropriate engagement with stakeholders, including affected employees and any appropriate employee representative bodies.  CME would implement any job reductions in accordance with all relevant legal obligations.  CME intends to approach the employee and management integration process with the aim of retaining and motivating the best talent across the Combined Company.

 

CME plans to fully observe, following completion of the Acquisition, contractual and statutory employment rights, including in relation to pensions, of all NEX employees.  CME does not intend to make any material changes to the conditions of employment of the employees (or balance of skills and functions) of NEX.  CME also does not intend to make any changes with regard to employer contributions into NEX's existing pension schemes or the accrual of benefits to existing members or the admission of new members to such pension schemes. 

 

Headquarters and locations

 

NEX's headquarters will be combined with CME's, and the Combined Company's headquarters will be located at CME's head office in Chicago. The Combined Company will also maintain its European headquarters in London.

 

CME believes there may be consolidation of office space in London, New York, Singapore, Hong Kong, Tokyo, Beijing and Sydney.  CME expects to retain either CME's or NEX's offices (or potentially both) in these locations.

 

CME will also consider potential efficiencies from combining NEX and CME's physical data centres and potentially moving some of the data stored in existing physical data centres to the virtual cloud.

 

No other changes are envisaged with respect to the redeployment of NEX's existing material fixed assets.

 

Other items

 

CME does not envisage any material change to the research and development functions of NEX as a result of the Acquisition. 

 

CME's intention is to seek the cancellation of the trading of NEX Shares on the London Stock Exchange from or shortly after the Effective Date, which would result in cost savings from not having to maintain a listing and related supporting back office functions.

 

No statements in this paragraph 12 constitute "post-offer undertakings" for the purposes of Rule 19.5 of the Code.

 

 

13.       Acquisition related arrangements

 

Confidentiality Agreement

 

CME and NEX entered into a confidentiality agreement on 15 February 2018 (the "Confidentiality Agreement"), pursuant to which each party has undertaken to keep confidential information relating to the other and to the Acquisition and not to disclose it to third parties (with certain exceptions). These confidentiality obligations will remain in force until the third anniversary of the date of the Confidentiality Agreement. The Confidentiality Agreement contains standstill provisions which restricted CME from acquiring or offering to acquire interests in certain securities of NEX; with those restrictions ceasing to apply upon the release of this Announcement. The Confidentiality Agreement contains restrictions on CME contacting NEX's shareholders, directors, employees, customers, suppliers and lenders for a period of eighteen months (though these restrictions will no longer apply in certain specified circumstances). The Confidentiality Agreement also contains provisions pursuant to which each party has agreed not to solicit directors and certain senior employees of the other party, subject to customary carve-outs, for a period of eighteen months.

 

Confidentiality and Joint Defense Agreement

 

CME, NEX and their respective external legal counsels entered into a confidentiality and joint defense agreement (the "Confidentiality  and Joint Defense Agreement") dated 13 March 2018, the purpose of which is to ensure that the exchange or disclosure of certain materials relating to the parties only takes place between their respective external legal counsels and external experts, and does not diminish in any way the confidentiality of such materials and does not result in a waiver of privilege, right or immunity that might otherwise be available.

 

Clean Team Confidentiality Agreement

 

CME and NEX entered into a clean team confidentiality agreement (the "Clean Team Confidentiality Agreement") on 20 February 2018, which sets out how any confidential information that is competitively sensitive can be disclosed, used or shared for the purposes of due diligence, synergies evaluation, planning the transition and integration and regulatory clearance.

 

Co-operation Agreement

 

CME, Bidco and NEX entered into the Co-operation Agreement dated 29 March 2018, pursuant to which, among other things, the parties have agreed to co-operate for the purposes of obtaining all regulatory clearances required in connection with the Acquisition and in connection with the preparation of the Scheme Document.

 

The Co-operation Agreement will terminate if: (i) agreed in writing between CME, Bidco and NEX; or (ii) upon the service of written notice by NEX to CME or CME to NEX if: (a) prior to the Long Stop Date: (A) any Condition which has not been waived is (or has become) incapable of satisfaction by the Long Stop Date and, notwithstanding that it has the right to waive such Condition, CME will not do so; or (B) any Condition which is incapable of waiver has become incapable of satisfaction by the Long Stop Date (in each case in circumstances where the invocation of the relevant  Condition (or confirmation that the Condition is incapable of satisfaction, as appropriate) is permitted by the Panel); (b) NEX makes an announcement before the publication of the Scheme Document and (if different) the circular convening the General Meeting that: (A) the NEX Board no longer intends to recommend the Acquisition; (B) it will not convene the Court Meeting or the General Meeting; or (C) it intends not to post the Scheme Document or (if different) the circular convening the General Meeting; (c) the NEX Board withdraws its recommendation of the Acquisition or if the Scheme Document does not contain such recommendation; (d) a third party announces a firm intention to make an offer or revised offer for the entire issued share capital of NEX which is (A) recommended by the NEX Board; or (B) completes, becomes effective or is declared or becomes unconditional in all respects; (e) if the Acquisition is withdrawn, terminated or lapses in accordance with its terms prior to the Long Stop Date, other than where CME or Bidco exercises its right under the Co-operation Agreement to implement the Acquisition by way of an Offer or it is otherwise followed within five Business Days (or such other period as CME, Bidco and NEX may agree) by an announcement under Rule 2.7 of the Code made by CME or Bidco or any person acting in concert with CME to implement the Acquisition by a different takeover offer or scheme of arrangement on substantially the same or improved terms; (f) if the Scheme is not approved by the NEX Shareholders at the Court Meeting or the General Meeting or the Court refuses to sanction the Scheme and, in each case, within two Business Days of a request from CME, NEX fails to give its consent to implement the Acquisition by way of an Offer rather than the Scheme; or (g) unless otherwise agreed by CME, Bidco and NEX, if the Effective Date has not occurred by the Long Stop Date.

 

Where CME is responsible for any regulatory clearances or authorisations which are necessary or expedient to satisfy a regulatory Condition, CME and Bidco have agreed to use all reasonable efforts to secure such regulatory clearances and authorisations as soon as reasonably practicable following the date of this Announcement. CME and Bidco have each agreed not to invoke any regulatory Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the regulatory Condition are of material significance to CME or Bidco in the context of the Acquisition in accordance with the Code as applied by the Panel.

 

The Co-operation Agreement records CME's and NEX's intention to implement the Acquisition by way of a Scheme, subject to the ability of CME and NEX to implement the Acquisition by way of an Offer in the circumstances described in the Co-operation Agreement (which have been summarised in this Announcement).

 

The Co-operation Agreement contains information on the impact of the Scheme on employees' options and awards under the NEX Share Schemes and Bidco's proposals for dealing with the options and awards. It also covers the treatment of employees' bonuses, a high level statement on employee retention awards designed to motivate and retain employees up to and following the Acquisition and proposals for the treatment of pay and benefits in the event that an employee leaves the NEX Group.

 

The detail of the proposals for NEX Share Schemes will be provided in separate communications to participants in due course. Employees will be provided with background to and information on the treatment of other aspects of remuneration arrangements at the appropriate time.

 

 

14.       Structure of the Acquisition 

 

Scheme

 

It is intended that the Acquisition will be effected by a Court-sanctioned scheme of arrangement between NEX and the Scheme Shareholders under Part 26 of the Companies Act.  The purpose of the Scheme is to provide for CME and Bidco to become the owners of the whole of the issued and to be issued share capital of NEX.  Under the Scheme, the Acquisition is to be principally achieved by the:

 

(a)     transfer of the Scheme Shares held by Scheme Shareholders to CME and Bidco in consideration for which the Scheme Shareholders will receive New CME Shares and cash consideration;  and

 

(b)     passing of the resolutions at the General Meeting.

 

Approval by Court Meeting and General Meeting

 

In order to become Effective, the Scheme requires the:

 

(a)     satisfaction (or, where applicable, waiver) of the Conditions;

 

(b)     approval of a majority in number of the Scheme Shareholders who vote, representing not less than 75 per cent. in value of the Scheme Shares held by those Scheme Shareholders, present and voting, either in person or by proxy, at the Court Meeting; and

 

(c)     approval of not less than 75 per cent. of the votes cast, either in person or by proxy, of the resolutions at the General Meeting (to be held directly after the Court Meeting) necessary in order to implement the Scheme.

 

Application to Court to sanction the Scheme

 

Once the approvals of the NEX Shareholders have been obtained at the Court Meeting and the General Meeting, and the other Conditions have been satisfied or (where applicable) waived, the Scheme must be sanctioned by the Court at the Court Hearing.

 

The Scheme will become effective in accordance with its terms on delivery of the Court Order to the Registrar.  Upon the Scheme becoming Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or General Meeting, or whether they voted in favour of or against the Scheme.

 

Full details of the Scheme to be set out in the Scheme Document

 

The Scheme will be subject to the satisfaction (or, where applicable, waiver) of the Conditions and the full terms and conditions to be set out in the Scheme Document.  Further details of the Scheme will be set out in the Scheme Document, including the expected timetable and the action to be taken by Scheme Shareholders.

 

The Scheme will be governed by the laws of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange, the FCA and the Listing Rules.

 

It is expected that the Scheme Document will be dispatched to NEX Shareholders and, for information only, to participants in the NEX Share Schemes within 28 days of the date of this Announcement, unless CME and NEX otherwise agree, and the Panel consents, to a later date.

 

Conditions to the Acquisition

 

The Acquisition will be subject to the Conditions and further terms set out in full in Appendix I to this Announcement and to be set out in the Scheme Document.

 

Amongst others, the Conditions include competition law clearances by the CMA and under the U.S. HSR Act, and regulatory approvals in the U.K., U.S., Hong Kong, Germany, Italy and Sweden.

 

The Scheme will also be conditional, amongst other things, upon the:

 

(a)     Scheme becoming Effective by the Long Stop Date, failing which the Scheme will lapse;

 

(b)     approval of the Scheme by a majority in number of the Scheme Shareholders, representing not less than 75 per cent. in value of the Scheme Shares held by those Scheme Shareholders, present and voting, either in person or by proxy, at the Court Meeting or at any adjournment thereof on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between CME and NEX and the Court may allow);

 

(c)     passing of the resolutions by the requisite majority at the General Meeting to be held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between CME and NEX and the Court may allow); and

 

(d)     sanction of the Scheme on or before the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date as may be agreed between CME and NEX and the Court may allow) and the delivery of an office copy of the Court Order to the Registrar.

 

Scheme timetable/further information

 

A full anticipated timetable will be set out in the Scheme Document which is intended to be posted to NEX Shareholders along with notices of the Court Meeting and General Meeting and the Forms of Proxy within 28 days of the date of this Announcement, unless NEX and CME otherwise agree, and the Panel consents, to a later date.  Subject to certain restrictions relating to persons resident in Restricted Jurisdictions, the Scheme Document will also be made available on CME's website at www.cmegroup.com/nex-group and NEX's website at www.nex.com/offer.

 

At this stage, subject to the approval and availability of the Court (which is subject to change), and subject to the satisfaction (or, where applicable, waiver) of the Conditions, CME expects the Acquisition will become Effective in the second half of 2018.

 

Right to switch to an Offer

 

Each of CME and Bidco reserves the right to elect, subject to the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Acquisition by way of an Offer for the entire issued and to be issued share capital of NEX as an alternative to the Scheme.  In such an event, the Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in Part C of Appendix I to this Announcement.

 

 

15.       De-listing and re-registration

 

Prior to the Scheme becoming Effective, a request will be made by NEX to the London Stock Exchange to cancel trading in NEX Shares on its market for listed securities to take effect on, or shortly after, the Effective Date and the U.K. Listing Authority will be requested to cancel the listing of the NEX Shares from the Official List on, or shortly after, the Effective Date.

 

Share certificates in respect of the NEX Shares will cease to be valid and should be destroyed following the Effective Date and entitlements to NEX Shares held within the CREST system shall be cancelled.

 

As soon as practicable after the Effective Date and after the cancellation of the listing of the NEX Shares on the Official List and the cancellation of the admission to trading of the NEX Shares on the London Stock Exchange's Main Market for listed securities, it is intended that NEX will be re-registered as a private limited company under the relevant provisions of the Companies Act.

 

 

16.       Disclosure of interests in NEX

 

CME confirms that it made an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the Code, on 27 March 2018.

 

As at the close of business on 28 March 2018, being the last practicable date prior to the publication of this Announcement, save for: (i) the disclosures in this paragraph 16; and (ii) the Irrevocable Undertakings referred to in paragraph 7 above, none of Bidco or any of its directors or CME or any of its directors or, so far as CME and the Board of Bidco are aware, any person acting, or deemed to be acting, in concert with Bidco:

 

·          had an interest in, or right to subscribe for, relevant securities of NEX;

 

·          had any short position in (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of, relevant securities of NEX;

 

·          had procured an irrevocable commitment or letter of intent to accept the terms of the Acquisition in respect of relevant securities of NEX; or

 

·          had borrowed or lent any NEX Shares.

 

Furthermore, save for the Irrevocable Undertakings described in paragraph 7 above, no arrangement exists between Bidco, CME or NEX or an associate of any of Bidco, CME or NEX in relation to NEX Shares.  For these purposes, an arrangement includes any indemnity or option arrangement, any agreement or any understanding, formal or informal, of whatever nature, relating to NEX Shares which may be an inducement to deal or refrain from dealing in such securities.

 

 

17.       Overseas shareholders

 

The availability of the Acquisition and the distribution of this Announcement to persons resident in, or citizens of, or otherwise subject to, jurisdictions outside the United Kingdom may be affected by the laws of the relevant jurisdictions.  Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.  NEX Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

 

This Announcement is not intended to and does not constitute or form part of any offer to sell or to subscribe for, or any invitation to purchase or subscribe for, or the solicitation of any offer to purchase or otherwise subscribe for, any securities.  NEX Shareholders are advised to read carefully the Scheme Document and the Forms of Proxy once these have been dispatched.

 

 

18.       Fractional entitlements

 

Fractions of New CME Shares will not be allotted to NEX Shareholders. Instead, all fractional shares which a holder of NEX Shares would otherwise be entitled to receive will be aggregated and calculations will be rounded down, and such holder shall receive, in lieu of such fractional entitlements, cash in an amount (rounded down to the nearest penny) equal to such fractional amount multiplied by the last reported sale price of CME Shares on Nasdaq (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source selected by CME) on the last Business Day prior to the Effective Date.

 

 

19.       General

 

The Acquisition will be subject to the Conditions and other terms set out in this Announcement and to the full terms and conditions which will be set out in the Scheme Document.  It is expected that the Scheme Document will be dispatched to NEX Shareholders as soon as practicable and, in any event, (save with the consent of the Panel) within 28 days of this Announcement.

 

In deciding whether or not to vote or procure votes in favour of the resolutions relating to the Scheme at the Meetings in respect of their NEX Shares, NEX Shareholders should rely on the information contained, and follow the procedures described, in the Scheme Document.

 

Details of the effect of the Acquisition on NEX ADR Holders will be set out in the Scheme Document in due course.

 

J.P. Morgan, Barclays, Citi, Evercore and KPMG have each given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their names in the form and context in which they appear.

 

The Scheme Document will not be reviewed by any federal state securities commission or regulatory authority in the United States, nor will any commission or authority pass upon the accuracy or adequacy of the Scheme Document. Any representation to the contrary is unlawful and may be a criminal offence.

 

The Acquisition will be subject to the Conditions and further terms that are set out in Appendix I, and to the full terms and conditions which will be set out in the Scheme Document.  Appendix II contains the bases and sources of certain information used in this Announcement.  Appendix III contains details of the Irrevocable Undertakings received in relation to the Acquisition that are referred to in this Announcement.  Appendix IV contains details and basis of preparation and principal assumptions of the anticipated quantified financial benefits of the Acquisition and of the reports required by Rule 28.1(a) of the Code from CME's reporting accountants, KPMG, and its financial advisers, J.P. Morgan and Barclays.  Appendix V contains definitions of terms used in this Announcement.  The Appendices form part of, and should be read in conjunction with, this Announcement.

 

 

20.       Documents on display

 

Subject to certain restrictions relating to persons resident in Restricted Jurisdictions, copies of the following documents will, by no later than 12 noon (London time) on the Business Day following the date of this Announcement, be made available on CME's website at www.cmegroup.com/nex-group and NEX's website at www.nex.com/offer (as applicable) until the end of the Offer Period:

 

(a)        this Announcement;

 

(b)        the Confidentiality Agreement;

 

(c)        the Confidentiality and Joint Defense Agreement;

 

(d)        the Clean Team Confidentiality Agreement;

 

(e)        the Co-operation Agreement;

 

(f)         the Irrevocable Undertakings; and

 

(g)        the Finance Documents.

 

Neither the contents of NEX's website or the contents of CME's website, nor the content of any other website accessible from hyperlinks on either such website, is incorporated into or forms part of, this Announcement.

 

 

Enquiries:

 

CME

 

Anita Liskey (Media contact)                                                    +1 312 466 4613

 

Laurie Bischel (Media contact)                                                 +1 312 648 8698

 

John Peschier (Investor Relations)                                             +1 312 930 8491

 

 

J.P. Morgan (Lead financial adviser to CME and financial adviser to Bidco)

 

Anu Aiyengar                                                                           +1 888 963 5089

 

Jeremy Capstick                                                                       +44 (0) 20 7742 4000

 

Dwayne Lysaght

 

Adam Laursen

 

 

Barclays (Financial adviser to CME)

 

Joel Fleck                                                                                 +1 212 526 7000

 

Matthew Smith                                                                        +44 (0) 20 7623 2323

 

 

Edelman (PR adviser to CME)

 

John Kiely                                                                                +44 (0) 203 047 2538

 

Alex Simmons                                                                          +44 (0) 203 047 2543

 

 

 

NEX

 

Samantha Wren, CFO                                                              +44 (0) 207 818 9000

 

Alex Dee, Head of Investor Relations

 

Bryony Scragg, Head of Media Relations

 

 

Citi (Joint lead financial adviser and corporate broker to NEX)

 

Piers Davison                                                                           +44 (0) 207 986 4000

 

Jan Skarbek

 

Peter Brown (Corporate Broking)

 

 

Evercore (Joint lead financial adviser to NEX)

 

Jane Gladstone                                                                         +1 212 857 3100

 

Edward Banks                                                                          +44 (0) 207 653 6000

 

Dave Cox

 

 

Maitland (PR adviser to NEX)

 

Neil Bennett                                                                             +44 (0) 207 379 5151

 

Rebecca Mitchell                                                                      +44 (0) 7951 057351

 

 

Goldman Sachs International is also acting as a financial adviser to NEX. Clifford Chance LLP are retained as legal advisers to NEX. Skadden, Arps, Slate, Meagher & Flom are retained as legal advisers to CME.

 

Important notices relating to financial advisers

 

J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Securities plc (which conducts its U.K. investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority) ("J.P. Morgan") is acting exclusively as joint financial adviser for CME and financial adviser to Bidco and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than CME and Bidco for providing the protections afforded to the clients of J.P. Morgan, nor for providing advice in relation to any matter referred to herein.

 

Barclays Bank PLC, acting through its Investment Bank ("Barclays") (which is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority) is acting exclusively as joint financial adviser for CME and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than CME for providing the protections afforded to the clients of Barclays, nor for providing advice in relation to any matter referred to herein.

 

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the U.S. Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in NEX securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

 

Citigroup Global Markets Limited ("Citi"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting as joint lead financial adviser to NEX and for no one else in connection with matters set out in this announcement and will not be responsible to anyone other than NEX for providing the protections afforded to its clients or for providing advice in relation to matters set out in this announcement.

 

Evercore Group L.L.C. ("Evercore LLC"), which is a securities broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC") and subject to regulation by the SEC and the Financial Industry Regulatory Authority ("FINRA"), and Evercore Partners International LLP ("EPI LLP") (together with Evercore LLC, "Evercore"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting as joint lead financial adviser for NEX and no one else in connection with matters set out in this announcement, and will not be responsible to anyone other than NEX for providing the protections afforded to clients of Evercore or for providing advice in relation to matters referred to in this announcement. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract or in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with this announcement, any statement contained therein or otherwise.  Apart from the responsibilities and liabilities, if any, which may be imposed on Evercore by FSMA, or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither Evercore nor any of its affiliates accepts any responsibility or liability whatsoever for the contents of this Announcement, and no representation, express or implied, is made by it, or purported to be made on its behalf, in relation to the contents of this Announcement, including its accuracy, completeness or verification of any other statement made or purported to be made by it, or on its behalf, in connection with NEX or the matters described in this Announcement. To the fullest extent permitted by applicable law, Evercore and its affiliates accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this Announcement or any statement contained therein.

 

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for NEX and no one else in connection with the Acquisition and will not be responsible to anyone other than NEX for providing the protections afforded to clients of Goldman Sachs International or for providing advice in connection with the Acquisition or the matters described in this Announcement or any transaction or arrangement referred to herein.

 

Further information

 

This Announcement is for information purposes only and is not intended to and does not constitute, or form any part of, an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise.  The Acquisition will be made solely by the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme.  Any voting decision or response in relation to the Acquisition should be made solely on the basis of the Scheme Document.

 

This Announcement does not constitute a prospectus or a prospectus equivalent document.

 

Overseas shareholders

 

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements.  In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their NEX Shares in respect of the Scheme at the Court Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that jurisdiction.  This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside England.

 

Copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of acceptance of the Acquisition.

 

If the Acquisition is implemented by way of an Offer, the Offer may not (unless otherwise permitted by applicable law and regulation) be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

 

Further details in relation to NEX Shareholders in overseas jurisdictions will be contained in the Scheme Document.

 

Notice to U.S. investors in NEX

 

The Acquisition relates to the shares of a U.K. company and is being made by means of a scheme of arrangement provided for under Part 26 of the Companies Act. The Acquisition, implemented by way of a scheme of arrangement, is not subject to the tender offer rules or the proxy solicitation rules under the U.S. Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable to a scheme of arrangement involving a target company in the U.K. listed on the London Stock Exchange, which differ from the disclosure requirements of U.S. tender offer and proxy solicitation rules. If, in the future, CME or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Co-operation Agreement, and determines to extend the Offer into the U.S., the Acquisition will be made in compliance with applicable U.S. laws and regulations.

 

The New CME Shares to be issued pursuant to the Acquisition have not been registered under the U.S. Securities Act, and may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act. The New CME Shares to be issued pursuant to the Acquisition will be issued pursuant to the exemption from registration provided by Section 3(a)(10) under the U.S. Securities Act. If, in the future, CME or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Co-operation Agreement, or otherwise in a manner that is not exempt from the registration requirements of the U.S. Securities Act, it will file a registration statement with the SEC that will contain a prospectus with respect to the issuance of New CME Shares. In this event, NEX Shareholders and NEX ADR Holders are urged to read these documents and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information, and such documents will be available free of charge at the SEC's website at www.sec.gov or by directing a request to CME's contact for enquiries identified above.

 

Neither the SEC nor any U.S. state securities commission has approved or disapproved of the New CME Shares to be issued in connection with the Acquisition, or determined if this Announcement is accurate or complete. Any representation to the contrary is a criminal offence in the U.S..

 

The financial information included in this Announcement has been prepared in accordance with International Financial Reporting Standards (as adopted by the European Union) and thus may not be comparable to financial information of U.S. companies or companies whose financial statements are prepared in accordance with U.S. generally accepted accounting principles.

 

It may be difficult for U.S. NEX Shareholders and NEX ADR Holders to enforce their rights and any claim arising out of the U.S. federal securities laws, because NEX is located in a non-U.S. country, and some or all of its officers and directors are residents of a non-U.S. country. U.S. NEX Shareholders and NEX ADR Holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws.  Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court's judgment.

 

U.S. NEX Shareholders and NEX ADR Holders also should be aware that the transaction contemplated herein may have tax consequences in the U.S. and, that such consequences, if any, are not described herein.  U.S. NEX Shareholders and NEX ADR Holders are urged to consult with legal, tax and financial advisers in connection with making a decision regarding this transaction.

 

Forward looking statements

 

This Announcement contains certain forward-looking statements with respect to CME, Bidco, NEX and the Combined Company.  These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.  Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "aim", "will", "may", "would", "could" or "should" or other words of similar meaning or the negative thereof.  Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, synergies, financial conditions, market growth, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the operations of the CME Group or the NEX Group; and (iii) the effects of government regulation on the business of the CME Group or the NEX Group.

 

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements.  These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future.  All subsequent oral or written forward-looking statements attributable to CME, Bidco or NEX or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. None of CME, Bidco or NEX undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

 

The form 10-K of CME for the year ended 31 December 2017 contains additional information regarding forward-looking statements with respect to CME.

 

No profit forecasts or estimates

 

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per ordinary share, for CME or NEX, respectively for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ordinary share for CME or NEX, respectively.

 

Quantified Financial Benefits Statement

 

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.  As a result, the cost savings and synergies referred to in the Quantified Financial Benefits Statement may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated.  No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast or interpreted to mean that the Combined Company's earnings in the first full year following the Effective Date of the Scheme, or in any subsequent period, would necessarily match or be greater than or be less than those of NEX or CME for the relevant preceding financial period or any other period.  For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CME and the CME Directors.

 

Right to switch to an Offer

 

Each of CME and Bidco reserves the right to elect, subject to the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Acquisition by way of an Offer for the entire issued and to be issued share capital of NEX as an alternative to the Scheme.  In such an event, the Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in Appendix I to this Announcement.

 

Publication on website

 

In accordance with Rule 26.1 of the Code, a copy of this Announcement will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, at www.cmegroup.com/nex-group and www.nex.com/offer by no later than 12 noon on 30 March 2018.

 

Neither the contents of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this Announcement.

 

You will not be sent a hard copy of this Announcement unless you request one.  You may request a hard copy of this Announcement, free of charge, by contacting Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or on +44 (0) 371 664 0565. NEX Shareholders may also request that all future documents, announcements and information sent to them in relation to the Acquisition should be in hard copy form.

 

Market Abuse Regulation

 

This Announcement contains inside information for the purposes of Article 7 of MAR. Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to NEX and its securities.

 

Information relating to NEX Shareholders

 

Please be aware that addresses, electronic addresses and certain other information provided by NEX Shareholders, persons with information rights and other relevant persons for the receipt of communications from NEX may be provided to CME during the offer period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

 

Rounding

 

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

Disclosure Requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror  in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

 

 

 

APPENDIX I

 

CONDITIONS AND FURTHER TERMS OF THE ACQUISITION

 

Part A

 

Conditions to the Acquisition

 

The Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the Code, by no later than 11.59 p.m. on the Long Stop Date.

 

Scheme approval

 

a)       The Scheme will be conditional upon:

 

(i)

 

A.      its approval by a majority in number representing not less than 75 per cent. in value of the NEX Shareholders (or the relevant class or classes thereof, if applicable) in each case present, entitled to vote and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting; and

 

B.      the Court Meeting and any separate class meeting which may be required by the Court or any adjournment of any such meeting being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date, if any, as CME and NEX may agree and the Court may allow);

 

(ii)

 

A.      all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the General Meeting or at any adjournment of that meeting; and

 

B.      the General Meeting or any adjournment of that meeting being held on or before the 22nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course (or such later date, if any, as CME and NEX may agree and the Court may allow); and

 

(iii)

 

A.      the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to CME and NEX) and the delivery of a copy of the Court Order to the Registrar; and

B.      the Court Hearing being held on or before the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date, if any, as CME and NEX may agree and the Court may allow).

 

If any Condition referred to in paragraphs (a)(i) to (iii) above is not capable of being satisfied by the date specified therein, CME shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by not later than 7.00 a.m. on the Business Day following the date so specified, stating whether CME has invoked that Condition or, with the agreement of NEX, specified a new date by which that Condition must be satisfied.

 

In addition, CME and NEX have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

 

Competition law and regulatory approvals

 

U.S. HSR Act clearance

 

b)      all necessary notifications and filings having been made and all applicable waiting periods (including any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations made thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Acquisition;

 

CMA clearance

 

c)       the CMA deciding, in terms reasonably satisfactory to CME: (i) not to make a Phase 2 CMA Reference (pursuant to sections 33 or 73 of the Enterprise Act 2002); or (ii) where the CMA has made a Phase 2 CMA Reference, confirmation having been received by CME from the CMA that: (A) the Acquisition may proceed without any undertakings, conditions or orders; or (B) the Acquisition may proceed subject to the giving of such undertakings by, or the imposition of such conditions or orders on, CME or NEX, on terms reasonably satisfactory to CME, and all necessary approvals or consents for clearance having been provided by the CMA;

 

FCA

 

d)      the FCA:

 

(i)      giving notice in writing to CME pursuant to section 189(4)(a) of FSMA of its approval;

 

(ii)      being treated as having given such approval under section 189(6) of FSMA; or

 

(iii)     giving notice in writing to CME pursuant to section 189(7) of FSMA of its conditional approval, on terms which will not materially limit the ability of any member of the CME Group to conduct or integrate or coordinate its business, or any part of it, with the businesses or any part of the businesses of any member of the NEX Group,

 

in respect of each person (whether or not a member of the CME Group) who will acquire control or (if applicable) increase control over (as defined in sections 181 and 182 of FSMA) any member of the NEX Group which is (or shall be as at the Effective Date) a U.K. authorised person (as defined in section 191G(1) of FSMA), and which in either case would result from or in connection with or is contemplated by the implementation of the Acquisition;

 

e)       the FCA:

 

(i)      giving notice in writing to CME pursuant to section 301G(2) of FSMA of its approval; or

 

(ii)      being treated as having given such approval under section 301G(4) of FSMA,

 

in respect of each person (whether or not a member of the CME Group) who will acquire control or (if applicable) increase control over (as defined in sections 301D of FSMA) any member of the NEX Group which is (or shall be as at the Effective Date) a recognised investment exchange (as defined in section 285 of FSMA), and which in either case would result from or in connection with or is contemplated by the implementation of the Acquisition;

 

Hong Kong Monetary Authority

 

f)       the Hong Kong Monetary Authority confirming in writing to CME that the Acquisition shall not result in any entity in the NEX Group which is an approved Money Broker (as defined in the Banking Ordinance (Cap. 155 of the laws of Hong Kong) ("BO")) ceasing to fulfil one or more of the criteria in Schedule 11 to the BO;

 

Securities and Futures Commission of Hong Kong

 

g)       the Securities and Futures Commission of Hong Kong:

 

(i)      giving notice in writing to CME pursuant to section 132(1)(a) of Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong) ("SFO") of its approval; or

 

(ii)      giving notice in writing to CME pursuant to 132(1)(a) of SFO of its conditional approval, on terms which will not materially limit the ability of any member of the CME Group to conduct or integrate or coordinate its business, or any part of it, with the businesses or any part of the businesses of any member of the NEX Group;

 

BaFin

 

h)       BaFin, the German Federal Financial Supervisory Authority, and the Bundesbank, the German Central Bank, having:

 

i)        confirmed in writing to CME that no regulatory notification pursuant to § 2c of the German Banking Act is required in relation to the proposed Acquisition; or

 

ii)       approved in writing to CME (or, as at the expiry of its statutory review period, not having made any objection to) the change of controlling shareholders of any member of the NEX Group authorised by BaFin as a financial services provider, as a result of the Acquisition or its implementation pursuant to the German Banking Act;

 

Bank of Italy

 

i)        the Bank of Italy confirming in writing to CME that it raises no objections (or, as at the expiry of its statutory review period, not having made any objection to) the change of controlling shareholders of any member of the NEX Group authorised in Italy as a financial services provider, as a result of the Acquisition or its implementation;

 

Swedish Financial Supervisory Authority

 

j)       the Swedish Financial Supervisory Authority giving notice of:

 

(i)      its approval to CME in respect of (or, as at the expiry of its statutory review period, having been deemed to approve) the change of controlling shareholders of any member of the NEX Group authorised in Sweden as an authorised investment firm as a result of the proposed Acquisition or its implementation; or

 

(ii)      its conditional approval (on terms which will not materially limit the ability of any member of the CME Group to conduct or integrate or coordinate its business, or any part of it, with the businesses or any part of the businesses of any member of the NEX Group), pursuant to chapter 24, section 3a of the Securities Market Act, to CME in respect of the change of controlling shareholders of any member of the NEX Group authorised in Sweden as an authorised investment firm as a result of the Acquisition or its implementation;

 

SEC

 

k)      all necessary notifications and filings having been made to the U.S. Securities and Exchange commission including any necessary amendment to the Form BD and Form ATS currently on file for BrokerTec Americas LLC;

 

FINRA

 

l)        the Financial Industry Regulatory Authority having confirmed in writing that it approves the change in ownership and control of BrokerTec Americas LLC as required by FINRA Rule 1017;

 

CFTC

 

m)      the U.S. Commodity Futures Trading Commission having confirmed in writing that it approves the change in ownership and control of NEX SEF Ltd. as may be required by CFTC Regulation 37.3(e);

 

Other regulatory

 

n)       any other relevant change of control consents, notifications or approvals as are required or desirable having been received or given (as appropriate) prior to the completion of the Acquisition according to the law of any other jurisdiction;

 

o)      a Relevant Authority not having cancelled or varied, and not having notified any member of the NEX Group (or intimated that it may notify) of any proposal to cancel or vary, any permission held by any authorised person within the NEX Group required to carry on its business at the date of this announcement;

 

Listing on Nasdaq, effectiveness of registration

 

p)      confirmation having been received by CME that the New CME Shares have been approved for listing, subject to official notice of issuance, on Nasdaq; and

 

q)      in the event that the Acquisition is implemented by way of an Offer, absent an available exemption from the registration requirements of the U.S. Securities Act, CME's registration statement having been declared effective by the SEC and no stop order having been issued or proceedings for suspension of the effectiveness of CME's registration statement having been initiated by the SEC and CME having received all necessary U.S. state securities law or blue sky authorisations;

 

General third party clearances

 

r)       the waiver (or non-exercise within any applicable time limits) by any relevant government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution, any entity owned or controlled by any relevant government or state, or any other body or person whatsoever in any jurisdiction (each a "Third Party") of any termination right, right of pre-emption, first refusal or similar right (which is material in the context of the Wider NEX Group or the Wider CME Group taken as a whole) arising as a result of or in connection with the Acquisition including, without limitation, its implementation and financing or the proposed direct or indirect acquisition of any shares or other securities in, or control of, NEX by CME or any member of the CME Group;

 

s)       no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, or having taken any other steps which would or might reasonably be expected to:

 

(i)      require, prevent or materially delay the divestiture, or materially alter the terms envisaged for any proposed divestiture by any member of the Wider CME Group or any member of the Wider NEX Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any part thereof which in any such case would be material in the context of the Wider NEX Group or Wider CME Group taken as a whole;

 

(ii)      require, prevent or materially delay, or materially alter the terms envisaged for, any proposed divestiture by any member of the Wider CME Group of any shares or other securities in NEX;

 

(iii)     impose any material limitation on, or result in a delay in, the ability of any member of the Wider CME Group directly or indirectly to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider NEX Group or the Wider CME Group or to exercise management control over any such member, in each case, to an extent which is material in the context of the Wider NEX Group or the Wider CME Group;

 

(iv)     otherwise adversely affect the business, assets, profits or prospects of any member of the Wider CME Group or of any member of the Wider NEX Group to an extent which is material in the context of the Wider CME Group or the Wider NEX Group, in either case taken as a whole;

 

(v)     make the Acquisition or its implementation or the acquisition or proposed acquisition by CME or any member of the Wider CME Group of any shares or other securities in, or control of NEX void, illegal, or unenforceable under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, materially restrain, restrict, prohibit, delay or otherwise interfere with the same, or impose material additional conditions or obligations with respect thereto, or otherwise challenge or interfere therewith;

 

(vi)     require (save as envisaged in the Acquisition) any member of the Wider CME Group or the Wider NEX Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider NEX Group or the Wider CME Group owned by any third party where such acquisition would be material in the context of the Wider NEX Group taken as a whole or, as the case may be, the Wider CME Group taken as a whole;

 

(vii)    impose any limitation on the ability of any member of the Wider CME Group to integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider NEX Group which is adverse to and material in the context of the Wider NEX Group or the Wider CME Group, in each case taken as a whole in the context of the Acquisition; or

 

(viii)   result in any member of the Wider NEX Group ceasing to be able to carry on business under any name under which it presently does so, and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any NEX Shares having expired, lapsed or been terminated;

 

t)       in addition to the competition law and regulatory approvals referred to in paragraphs (b) - (o) above, all necessary filings or applications having been made in connection with the Acquisition and all necessary statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Acquisition or the acquisition by any member of the Wider CME Group of any shares or other securities in, or control of, NEX and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals or the proposed acquisition of any shares or other securities in, or control of, NEX by any member of the Wider CME Group having been obtained in terms and in a form reasonably satisfactory to CME from all appropriate Third Parties or persons with whom any member of the Wider NEX Group has entered into contractual arrangements and all such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals together with all authorisations orders, recognitions, grants, licences, confirmations, clearances, permissions and approvals necessary or appropriate to carry on the business of any member of the Wider NEX Group, in each case which is material in the context of the Wider CME Group or the Wider NEX Group as a whole, remaining in full force and effect and all material filings necessary for such purpose have been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Acquisition becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

 

Certain matters arising as a result of any arrangement, agreement etc.

 

u)       except as Disclosed, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider NEX Group is a party or by or to which any such member or any of its assets are or may be bound, entitled or subject, which, in each case as a consequence of the Acquisition or the proposed acquisition of any shares or other securities in NEX or because of a change in the control or management of NEX or otherwise, would or would reasonably be expected to result in (in each case to an extent which is material in the context of the Wider NEX Group as a whole, or in the context of the Acquisition):

 

(i)      any monies borrowed by or any other indebtedness or liabilities (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

 

(ii)      any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or adversely affected or any onerous obligation or liability arising or any action being taken or arising thereunder;

 

(iii)     any assets or interests of any such member being or falling to be disposed of or charged or ceasing to be available to any such member or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any such member other than in the ordinary course of business;

 

(iv)     the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member;

 

(v)     the rights, liabilities, obligations or interests of any such member in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

 

(vi)     the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected;

 

(vii)    any such member ceasing to be able to carry on business under any name under which it presently does so; or

 

(viii)   the creation of any liability, actual or contingent, by any such member, other than trade creditors or other liabilities incurred in the ordinary course of business,

 

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider NEX Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this Condition (u), in each case which is or would be material in the context of the Wider NEX Group taken as a whole;

 

No material transactions, claims or changes in the conduct of the business of the NEX Group

 

v)       except as Disclosed, no member of the Wider NEX Group having, since 31 March 2017:

 

(i)      save as between NEX and wholly-owned subsidiaries of NEX or for NEX Shares issued pursuant to the exercise of options or vesting of awards granted under the NEX Share Schemes, issued, authorised or proposed the issue of additional shares of any class;

 

(ii)      save as between NEX and wholly-owned subsidiaries of NEX or for the grant of options and awards under the NEX Share Schemes, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;

 

(iii)     save for the Permitted Dividends, other than to another member of the NEX Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

 

(iv)     save for intra-NEX Group transactions, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;

 

(v)     save for intra-NEX Group transactions, made or authorised or proposed or announced an intention to propose any material change in its loan capital;

 

(vi)     issued, authorised or proposed the issue of any debentures or (save for intra-NEX Group transactions), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any liability (actual or contingent);

 

(vii)    purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

 

(viii)   implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business or entered into or changed the terms of any contract with any director or senior executive;

 

(ix)     entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be restrictive on the businesses of any member of the Wider NEX Group or the Wider CME Group or which involves an obligation of such a nature or magnitude or which is other than in the ordinary course of business and which, in any such case, is material in the context of the Wider NEX Group or the Wider CME Group taken as a whole;

 

(x)     (other than in respect of a member of the Wider NEX Group which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

 

(xi)     waived or compromised any claim otherwise than in the ordinary course of business and which is material in the context of the Wider NEX Group taken as a whole;

 

(xii)    entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition and which is material in the context of the Wider NEX Group taken as a whole;

 

(xiii)   having made or agreed or consented to any significant change to:

 

A.      the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider NEX Group for its directors, employees or their dependents;

 

B.      the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;

 

C.      the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

 

D.      the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made, in each case, to the extent which is material in the context of the Wider NEX Group taken as a whole;

 

(xiv)   proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider NEX Group and in each case which is material in the context of the Wider NEX Group taken as a whole; or

 

(xv)    having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of NEX Shareholders in a general meeting in accordance with, or as contemplated by, Rule 21.1 of the Code;

 

No adverse change, litigation or regulatory enquiry

 

w)      except as Disclosed, since 31 March 2017:

 

(i)      no adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects of any member of the Wider NEX Group which is material in the context of the Wider NEX Group taken as a whole;

 

(ii)      no litigation, arbitration proceedings, prosecution or other legal or regulatory proceedings to which any member of the Wider NEX Group is or may become a party (whether as a plaintiff, defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the Wider NEX Group having been instituted, announced or threatened by or against or remaining outstanding in respect of any member of the Wider NEX Group which is material in the context of the Wider NEX Group taken as a whole;

 

(iii)     no contingent or other liability having arisen or become apparent to CME which would be likely to adversely affect any member of the Wider NEX Group, taken as a whole;

 

(iv)     no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider NEX Group which is necessary for the proper carrying on of its business; and

 

(v)     no member of the Wider NEX Group having conducted its business in breach of any applicable laws and regulations which in any case is material in the context of the Wider NEX Group taken as a whole;

 

No discovery of certain matters

 

x)       except as Disclosed, CME not having discovered:

 

(i)      that any financial, business or other information concerning the Wider NEX Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider NEX Group is misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not misleading; or

 

(ii)      that any member of the Wider NEX Group is subject to any liability (actual or contingent) which is not disclosed in the annual report and accounts of NEX for the financial year ended 31 March 2017,

 

in each case, to the extent which is material in the context of the Wider NEX Group taken as a whole;

 

y)         except as Disclosed, CME not having discovered that:

 

(i)      any past or present member of the Wider NEX Group has failed to comply in any material respect with any or all applicable legislation or regulations, of any jurisdiction with regard to the use, storage, carriage, disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair materially the environment (including property) or harm human health or animal health or otherwise relating to environmental matters or the health and safety of humans, or that there has otherwise been any such storage, carriage, disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which storage, carriage, disposal, spillage, release, discharge, leak or emission would be likely to give rise to any material liability (actual or contingent) on the part of any member of the Wider NEX Group; or

 

(ii)      there is, or is likely to be, for that or any other reason whatsoever, any material liability (actual or contingent) of any past or present member of the Wider NEX Group to make good, repair, reinstate or clean up any property now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider NEX Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction; or

 

Anti-corruption, sanctions and criminal property

 

z)         save as Disclosed, CME not having discovered that:

 

(i)      any past or present member, director, officer or employee of the Wider NEX Group is or has at any time engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation or any person that performs or has performed services for or on behalf of the Wider NEX Group is or has at any time engaged in any activity, practice or conduct in connection with the performance of such services which would constitute an offence under the Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation; or

 

(ii)      any asset of any member of the Wider NEX Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition); or

 

(iii)     any past or present member, director, officer or employee of the NEX Group, or any other person for whom any such person may be liable or responsible, has engaged in any business with, made any investments in, made any funds or assets available to or received any funds or assets from: (a) any government, entity or individual in respect of which U.S. or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by U.S. or European Union laws or regulations, including the economic sanctions administered by the U.S. Office of Foreign Assets Control, or HM Treasury in the U.K.; or (b) any government, entity or individual targeted by any of the economic sanctions of the United Nations, the U.S., the European Union or any of its member states; or

 

(iv)     no member of the NEX Group being engaged in any transaction which would cause CME to be in breach of any law or regulation upon its acquisition of NEX, including the economic sanctions of the U.S. Office of Foreign Assets Control, or HM Treasury & Customs in the U.K., or any government, entity or individual targeted by any of the economic sanctions of the United Nations, the U.S., the European Union or any of its member states,

 

in each case, to the extent which is material in the context of the Wider NEX Group taken as a whole.

 

 

Part B

 

Waiver and Invocation of the Conditions

 

Subject to the requirements of the Panel in accordance with the Code, each of CME and Bidco reserves the right to waive, in whole or in part, all or any of the Conditions in Part A above, except for Conditions (a)(i)(A), (a)(ii)(A) and (a)(iii)(A) (Scheme Approval), and (p) and (q) (Listing on Nasdaq, effectiveness of registration), which cannot be waived.

 

The Acquisition will be subject to the satisfaction (or waiver, if permitted) of the Conditions in Part A above, and to certain further terms set out in Part D below, and to the full terms and conditions which will be set out in the Scheme Document.

 

Conditions (a)(i)(A), (a)(ii)(A) and (b) to (z) (inclusive) must be fulfilled, determined by CME to be or to remain satisfied or (if capable of waiver) waived, by no later than 11.59 p.m. on the date immediately preceding the date of the Court Hearing, failing which the Acquisition will lapse. CME and Bidco shall be under no obligation to waive or treat as satisfied any of Conditions (b) to (o) and (r) to (z) (inclusive) by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions to the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

 

 

Part C

 

Implementation by way of an Offer

 

Subject to obtaining the consent of the Panel and subject to the terms of the Co-operation Agreement, each of CME and Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme, if: (i) NEX provides its written consent (an "Agreed Switch"); (ii) a third party announces a firm intention to make an offer for NEX and the NEX Board recommends the NEX Shareholders to accept such offer in whole or in part or fails to publicly reaffirm its recommendation of the Acquisition within 5 Business Days of being requested by CME in writing to do so; (iii) the NEX Board withdraws or materially and adversely qualifies its recommendation of the Acquisition; or (iv) in the event that (a) the Meetings are not held on or before the 22nd day after their respective expected dates as set out in the Scheme Document (or such later date as may be agreed in writing between the parties with the consent of the Panel and the approval of the Court (if such approval is required)) (except in certain limited circumstances), or (b) the Court Hearing is not held on or before the 22nd day after the expected date as set out in the Scheme Document (or such later date as may be agreed in writing between the parties with the consent of the Panel and the approval of the Court (if such approval is required)) (except in certain limited circumstances).

 

In such event, such Offer will be implemented on the same terms and conditions, so far as applicable, as those which would apply to the Scheme subject to appropriate amendments to reflect the change in method of effecting the Offer, including (without limitation) the inclusion of an acceptance condition set at 90 per cent. of the NEX Shares to which the Offer relates or such lesser percentage as CME or Bidco (and, in the case of an Agreed Switch, NEX), with the consent of the Panel, decides, being in any case more than 50 per cent. of the NEX Shares to which the Offer relates.

 

 

Part D

 

Certain further terms of the Acquisition

 

The Acquisition will lapse if the Scheme or Offer or any matter arising from or relating to the Acquisition becomes subject to a CMA Phase 2 Reference on or before the date of the Meetings. 

 

The Acquisition will lapse if the Scheme or Offer or any matter arising from or relating to the Acquisition is referred from the CMA to the European Commission under Article 22(1) of Council Regulation (EC) 139/2004 before the date of the Meetings. 

 

The Acquisition will lapse if the Scheme does not become effective by 11.59 p.m. on the Long Stop Date.

 

The availability of the Acquisition to persons not resident in the U.K. may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the U.K. should inform themselves about, and observe, any applicable requirements. NEX Shareholders who are in any doubt about such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay and observe any applicable requirements.

 

This Acquisition will be governed by English law and be subject to the jurisdiction of the English courts and to the Conditions set out in the Scheme Document. The Acquisition will comply with the applicable rules and regulations of the FCA, the London Stock Exchange and the Code.

 

Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

 

Fractions of New CME Shares will not be allotted to NEX Shareholders. Instead, all fractional shares which a holder of NEX Shares would otherwise be entitled to receive will be aggregated and calculations will be rounded down, and such holder shall receive, in lieu of such fractional entitlements, cash in an amount (rounded down to the nearest penny) equal to such fractional amount multiplied by the last reported sale price of CME Shares on Nasdaq (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source selected by CME) on the last Business Day prior to the Effective Date.

 

The NEX Shares will be acquired by CME and Bidco (or their nominee) with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this Announcement or thereafter attaching thereto, including (without limitation) the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Effective Date in respect of the NEX Shares.

 

NEX Shareholders will be entitled to receive a final dividend for NEX in respect of the year ending 31 March 2018, such dividend not to exceed an amount of 7.65 pence per NEX Share (the "NEX Final Dividend").  In the event that the Effective Date occurs prior to the date of NEX's 2018 annual general meeting (currently expected to be in July 2018), the NEX Board intends to declare the NEX Final Dividend as a second interim dividend for the relevant period. In addition, if prior to the Effective Date, CME declares a dividend other than in respect of its regular four quarterly dividends (a "CME Special Dividend"), then NEX will also be entitled to declare and pay, by way of a special dividend, an amount per NEX Share equal to 0.0444 times the CME Special Dividend, multiplied by the exchange rate for the conversion of U.S. dollars into pounds sterling derived from WM/Reuters as at 4.00 p.m. (London time) on the ex-dividend date  of the CME Special Dividend (the "NEX Special Dividend") .  The record date for the NEX Special Dividend must be a date on or after the ex-dividend date of the CME Special Dividend.

 

Save for the Permitted Dividends, if any dividend or other distribution is announced, declared, made or paid in respect of the NEX Shares on or after the date of this Announcement and prior to the Effective Date, each of CME and Bidco reserves the right to reduce the consideration payable in respect of each NEX Share by the amount of all or part of any such dividend or other distribution.

 

The New CME Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing CME Shares, save that they will not participate in any dividend payable by CME with reference to a record date prior to the Effective Date.

 

 

 

 

 

 

APPENDIX II

 

SOURCES OF INFORMATION AND BASES OF CALCULATION

 

In this Announcement:

 

(i)           unless otherwise stated, financial information concerning NEX has been extracted from the Annual Report and Accounts of NEX for the year ended 31 March 2017 and NEX's results for the six months ended 30 September 2017;

 

(ii)          unless otherwise stated, financial information concerning CME has been extracted from the form 10-K of CME for the year ended 31 December 2017;

 

(iii)          the value of the Acquisition is based upon 379,735,432 NEX Shares in issue on 28 March 2018 and 5,854,555 NEX Shares to be issued on the expected vesting of awards and the exercise of options granted or expected to be granted under the NEX Share Schemes, excluding 785,352 options which are expected to lapse and including 2,596,024 awards expected to be granted in connection with the financial year ending 31 March 2018;

 

(iv)         as at 27 March 2018, CME had approximately 342,454,177 fully diluted CME Shares (based on 1,922,265 options outstanding as at 31 December 2017 and 340,531,912 CME Shares in issue as at 27 March 2018);

 

(v)          as at 28 March 2018 (being the last practicable date prior to this Announcement), NEX had 379,735,432 NEX Shares in issue;

 

(vi)         unless otherwise stated, all prices for NEX Shares are the Closing Price for the relevant date;

 

(vii)         unless otherwise stated, all prices for CME Shares are the closing price derived from Nasdaq on the relevant date;

 

(viii)        the exchange rate of US$1.4101:£1 for the conversion of U.S. dollars into pounds sterling has been derived from WM/Reuters and is based on the exchange rate as at 4.00 p.m. (London time) on 28 March 2018 (being the last practicable date before the date of this Announcement); and

 

(ix)         NEX's total shareholder return of 52.4% since the sale of its voice broking business in 2016 is calculated based on the increase in the price per NEX Share between its opening price on 30 December 2016 and its closing price on 15 March 2018, plus total dividends of 30.5p declared and paid to NEX Shareholders since 30 December 2016.

 

 

 

 

 

 

APPENDIX III

 

IRREVOCABLE UNDERTAKINGS

 

 

Bidco has received irrevocable commitments from the NEX Directors, as listed below, in respect of their own beneficial holdings of NEX Shares and (to the extent relevant) the beneficial holdings of each NEX Director's spouse, civil partner, de facto partner, or similarly-related person, representing in aggregate approximately 16.75 per cent. of the existing issued ordinary share capital of NEX.  These commitments require each NEX Director to vote or procure that the registered holder votes in favour of the resolutions relating to the Acquisition at the Meetings (or, in the event the Acquisition is implemented by means of an Offer, to accept, or procure acceptance of, the Offer).

 

 

Name of NEX Director	Number of NEX Shares	% of NEX issued share capital
Charles Gregson	233,223	0.06
Michael Spencer	63,117,694	16.62
Samantha Wren	11,367	<0.01
John Sievwright	27,994	0.01
Ivan Ritossa	168,413	0.04
Robert Standing	15,714	<0.01
Ken Pigaga	11,422	<0.01
Anna Ewing	5,000	<0.01
TOTAL	63,590,827	16.75

These Irrevocable Undertakings will continue to be binding in the event that a higher competing offer is made for NEX.

 

Bidco has also received irrevocable undertakings from Michael Spencer, Samantha Wren and Ken Pigaga, also NEX Directors, to vote or procure votes in favour of the resolutions relating to the Scheme at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of any NEX Shares received prior to the Voting Record Time as a result of their options and awards over NEX Shares (excluding awards under tax qualifying share option plans) under the NEX Share Schemes (being 5,240,658 NEX Shares for Michael Spencer, 67,883 NEX Shares for Samantha Wren and 447,031 NEX Shares for Ken Pigaga).

 

The Irrevocable Undertakings will cease to be binding if:

 

·    the Acquisition is implemented by way of an Offer and an offer document is not sent to NEX Shareholders within the permitted period under the Code or as otherwise agreed with the Panel; or

 

·    the Scheme lapses or is withdrawn in accordance with its terms and CME or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise; or

 

·    any competing offer for the issued and to be issued ordinary share capital of NEX is made which is declared wholly unconditional (if implemented by way of a takeover offer) or otherwise becomes effective (if implemented by way of a scheme of arrangement); or

 

·    the Scheme has not become effective by 6.00 p.m. (London time) on the Long Stop Date.

 

 

APPENDIX IV

 

QUANTIFIED FINANCIAL BENEFITS STATEMENT

 

Part A

 

 

Paragraph 4 of this Announcement contains statements of estimated cost savings and synergies arising from the Acquisition (together, the "Quantified Financial Benefits Statement").

A copy of the Quantified Financial Benefits Statement is set out below:

 

The CME Board, having reviewed and analysed the potential benefits of the Acquisition, based on its experience and the analysis completed and presented by management, expects that the Acquisition will deliver annualised run rate cost synergies of $200 million by the end of 2021 (assuming completion in 2018).  These savings are in addition to the annual cost savings of £40 million from the transformation programme previously announced by NEX, which are expected to be achieved in full in 2020.

 

Other than the NEX-announced transformation plan cost savings, these synergies are expected to arise as a direct result of the Acquisition and could not be achieved independently of the Acquisition.

 

These cost synergies are divided among and would be realised principally from:

 

a)    Centralisation and consolidation of operational functions, accounting for approximately 20% of the recurring cost synergies:

 

•     streamlining of operational support required for the trading platforms and post-trade services; and

 

•     scale efficiencies across common businesses.

 

b)    IT systems migration and consolidation, accounting for a further approximately 35% of the recurring cost synergies:

 

•     harmonisation of technology infrastructure across the Combined Company; and

 

•     centralisation and removal of duplicate IT functions.

 

c)    Removal of duplicate selling, general and administrative expenses, accounting for the remaining approximately 45% of the recurring cost synergies:

 

•     streamlining of support and service functions and corporate systems; and

 

•     removal of duplication of services.

 

The total expected run rate cost synergies of $200 million per annum are equivalent to approximately 12.5% of the Combined Company's 2017 adjusted operating costs of approximately $1.6 billion.

 

It is expected that synergy and savings realisation will take place progressively, whereby approximately 25% of the run rate cost synergies would be realised by the end of year 1, rising to approximately 55% by the end of year 2 and 100% by the end of year 3.

 

In order to realise the total synergies, CME expects to incur one-time cash costs of $285 million. Of this, approximately $60 million will be capital investment to facilitate the migration of IT systems and for consolidation of facilities.

 

Dis-synergies have been considered in quantifying the net impact of the synergy benefits and are not expected to be material.

 

Further information on the bases of belief supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.

 

 

Bases of belief and principal assumptions

 

•      Headcount reductions were contemplated with the aim of retaining and motivating the best talent across the Combined Company.

 

•      Client-centric approach to the integration whereby a key value driver will be operational excellence and continued delivery on customers' needs.

 

•      In general, the cost synergy assumptions have been risk adjusted, exercising a degree of prudence in the calculation of the estimated cost synergy benefit set out above.

 

•      This cost synergy report has been developed and refined by CME teams based on data provided by NEX management, internal analyses, prior experience as well as conducted with access to a virtual data room, NEX management presentation, and discussions with NEX management.

 

•      Estimates were based on CME's and NEX's audited fiscal 2017 results; NEX's results were adjusted for its ongoing transformation programme.

 

•      Where possible, CME identified a cost baseline to calculate estimated savings and expenses on a bottom-up basis, however in circumstances where data has been limited, estimates and assumptions were made by CME.

 

•      Potential areas of dis-synergy have also been considered, with CME assessing any additional headcount and costs necessary for the Combined Company to operate successfully, which were determined to be immaterial for the analysis

 

•      Revenue benefits have not been included in this synergy report.

 

•      CME's estimates of ongoing cost benefits and one-off costs have been phased over a three-year period.

 

•      The figures have been converted to USD at the US$/£ spot rate of 1.41 where applicable, based on the exchange rate as at 4.00 p.m. (London time) on 23 March 2018.

 

 

Reports

 

As required by Rule 28.1(a) of the Code, the Quantified Financial Benefits Statement has been reported on by KPMG, as reporting accountants to CME, and J.P. Morgan and Barclays, as financial advisers to CME.

 

Copies of these reports are included in Part B and Part C of this Appendix IV.  Each of KPMG, J.P. Morgan and Barclays has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.

 

Notes

 

1.       These statements of estimated synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.  In addition, due to the scale of the Combined Company, there may be additional changes to the Combined Company's operations.  As a result, the estimated synergies referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated.

 

2.       The Quantified Financial Benefits Statement should not be construed as a profit forecast or interpreted to mean CME's earnings in the first full year following the Effective Date, or in any subsequent period, will necessarily match or be greater than or be less than those of CME or NEX for the relevant preceding financial period or any other period.

 

3.       For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement is the responsibility of CME and the CME Directors.

 

 

 

Part B

 

Report from KPMG LLP

 

The Directors

CME Group Inc.

20 South Wacker Drive

Chicago, Illinois 60606

USA

 

 

J.P. Morgan Securities plc

25 Bank Street,

Canary Wharf,

London E14 5JP

United Kingdom

 

J.P. Morgan Securities LLC.

(together with J.P. Morgan Securities plc, "J.P. Morgan")

383 Madison Avenue,

New York,

NY - 10179

USA

 

Barclays Bank PLC, acting through its Investment Bank

5 The North Colonnade,

Canary Wharf, E14 4BB

United Kingdom

 

29 March 2018

 

Ladies and Gentlemen

 

Published Report on Quantified Financial Benefits Statement by CME Group Inc ("CME")

 

We refer to the statement (the "Statement") made by the Directors of CME Group Inc ("Directors") set out in Part A of Appendix IV to the announcement dated 29 March 2018 in relation to the proposed acquisition of NEX Group PLC by CME Group Inc (the "Announcement") to the effect that:

 

"The CME Board, having reviewed and analysed the potential benefits of the Acquisition, based on its experience and the analysis completed and presented by management, expects that the Acquisition will deliver annualised run rate cost synergies of $200 million by the end of 2021 (assuming completion in 2018).  These savings are in addition to the annual cost savings of £40 million from the transformation programme previously announced by NEX, which are expected to be achieved in full in 2020.

 

Other than the NEX-announced transformation plan cost savings, these synergies are expected to arise as a direct result of the Acquisition and could not be achieved independently of the Acquisition.

 

These cost synergies are divided among and would be realised principally from:

 

(a)     Centralisation and consolidation of operational functions, accounting for approximately 20% of the recurring cost synergies:

 

-      streamlining of operational support required for the trading platforms and post-trade services; and

 

-      scale efficiencies across common businesses.

 

(b)     IT systems migration and consolidation, accounting for a further approximately 35% of the recurring cost synergies:

 

-      harmonisation of technology infrastructure across the Combined Company; and

 

-      centralisation and removal of duplicate IT functions.

 

(c)     Removal of duplicate selling, general and administrative expenses, accounting for the remaining approximately 45% of the recurring cost synergies:

 

-      streamlining of support and service functions and corporate systems; and

 

-      removal of duplication of services.

 

The total expected run rate cost synergies of $200 million per annum are equivalent to approximately 12.5% of the Combined Company's 2017 adjusted operating costs of approximately $1.6 billion.

 

It is expected that synergy and savings realisation will take place progressively, whereby approximately 25% of the run rate cost synergies would be realised by the end of year 1, rising to approximately 55% by the end of year 2 and 100% by the end of year 3.

 

In order to realise the total synergies, CME expects to incur one-time cash costs of $285 million. Of this, approximately $60 million will be capital investment to facilitate the migration of IT systems and for consolidation of facilities.

 

Dis-synergies have been considered in quantifying the net impact of the synergy benefits and are not expected to be material."

 

The Statement has been made in the context of the disclosures Part A of Appendix IV of the announcement setting out, inter alia, the basis of the Directors' belief (including the principal assumptions and sources of information) supporting the Statement and their analysis and explanation of the underlying constituent elements.

 

This report is required by Rule 28.1(a) of the City Code on Takeovers and Mergers ('the City Code') and is given for the purpose of complying with that requirement and for no other purpose. 

 

Responsibilities

 

It is the responsibility of the Directors to prepare the Statement in accordance with the requirements of the City Code. 

 

It is our responsibility to form an opinion, as required by Rule 28.1(a) of the City Code as to the proper compilation of the Statement and to report that opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the announcement.

 

Basis of preparation of the Statement

 

The Statement has been prepared on the basis stated in Part A of Appendix IV of the announcement.

 

Basis of opinion

 

We have discussed the Statement, together with the underlying plans, with the Directors and J.P. Morgan and Barclays. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.  We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board of the United Kingdom.

 

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Statement has been properly compiled on the basis stated.

 

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United States of America or other jurisdictions and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

 

We do not express any opinion as to the achievability of the benefits identified by the Directors in the Statement.  The Statement is subject to uncertainty as described in Appendix II to the Statement.  Because of the significant changes in the enlarged group's operations expected to flow from the transaction and because the Statement relates to the future, the actual benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material.

 

Opinion

 

On the basis of the foregoing, we report that in our opinion the Statement has been properly compiled on the basis stated.

 

 

Yours faithfully

 

 

 

KPMG LLP

 

 

 

Part C

Report from J.P. Morgan Securities plc and Barclays Bank Plc, acting through its Investment Bank

 

The Board of Directors

CME Group Inc.

20 South Wacker Drive

Chicago, Illinois 60606

USA

 

29 March 2018

 

Dear Ladies and Gentlemen,

 

We refer to the quantified financial benefits statement, the bases of belief thereof and the notes thereto (together, the "Statement") made by CME Group Inc. ("CME") and set out in Part A of Appendix IV to the Rule 2.7 announcement dated 29 March 2018 of which this letter forms part (the "Announcement"), for which the directors of CME (the "Directors") are solely responsible under Rule 28.3 of the City Code on Takeovers and Mergers (the "Code").

 

We have discussed the Statement (including the assumptions, bases of calculation and sources of information referred to therein), with the Directors and those officers and employees of CME who have developed the underlying plans as well as with KPMG LLP ("KPMG"). The Statement is subject to uncertainty as described in the Announcement and our work did not involve an independent examination, or verification, of any of the financial or other information underlying the Statement.

 

We have relied upon the accuracy and completeness of all the financial and other information provided to us by or on behalf of CME, or otherwise discussed with or reviewed by us, in connection with the Statement, and we have assumed such accuracy and completeness for the purposes of providing this letter. The Directors have confirmed to us that all information relevant to the Statement has been disclosed to us.

 

We do not express any view as to the achievability of the quantified financial benefits, whether on the basis identified by the Directors in the Statement, or otherwise.

 

We have also reviewed the work carried out by KPMG and have discussed with KPMG its opinion addressed to you and us on this matter and which is set out in Part B of Appendix IV to the Announcement, and the accounting policies and bases of calculation for the Statement.

 

On the basis of the foregoing, we consider that the Statement, for which the Directors are solely responsible, has been prepared with due care and consideration.

 

This letter is provided to you solely having regard to the requirements of, and in connection with, Rule 28.1(a)(ii) of the Code and for no other purpose.  We accept no responsibility to CME, its shareholders or to any person other than the Directors in respect of the contents of this letter. We are acting exclusively as financial advisers to CME and no one else and it was for the purpose of complying with Rule 28.1(a)(ii) of the Code that CME requested us to prepare this letter relating to the Statement.  No person other than the Directors can rely on the contents of, or the work undertaken in connection with, this letter, and to the fullest extent permitted by law, we expressly exclude and disclaim all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents or the work undertaken in connection with this letter or any of the results or conclusions that may be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.

 

Yours faithfully,

 

 

 

 

For and on behalf of

J.P. Morgan Securities plc                                        Barclays Bank plc, acting through its Investment Bank

 

 

APPENDIX V

 

DEFINITIONS 

 

The following definitions apply throughout this Announcement, unless the context otherwise requires:

 

 

 

Acquisition	means the proposed acquisition by CME and Bidco (or its nominee(s)) of the entire issued and to be issued share capital of NEX, to be implemented by means of the Scheme as described in this Announcement (or, should CME or Bidco so elect, by an Offer subject to the consent of the Panel and subject to the terms of the Co-operation Agreement)
Announcement	means this announcement made pursuant to Rule 2.7 of the Code
Barclays	means Barclays Bank plc, acting through its Investment Bank
Bidco	means CME London Limited, a newly-incorporated English company with registered number 11276290 and with its registered address at 4th Floor, 1 New Change, London EC4M 9AF, United Kingdom
Business Day	means a day (other than a Saturday, Sunday, public or bank holiday) on which banks are generally open for business in London and Chicago
Citi	means Citigroup Global Markets Limited
Clean Team Confidentiality Agreement	means the clean team confidentiality agreement entered into between CME and NEX dated 20 February 2018, as described in paragraph 13 of this Announcement
Closing Price	means the closing middle market quotation of a share derived from the Daily Official List of the London Stock Exchange
CMA	means the U.K. Competition and Markets Authority (or any successor body or bodies carrying out the same functions in the United Kingdom from time to time)
CMA Phase 2 Reference	means a reference pursuant to sections 22, 33, 45 or 62 of the Enterprise Act 2002 of the Acquisition to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013
CME	means CME Group Inc., a company incorporated in Delaware with its registered office at 20 South Wacker Drive, Chicago, Illinois, U.S.
CME Board	means the board of directors of CME
CME Directors	means the directors of CME at the date of this Announcement or, where the context so requires, the directors of CME from time to time
CME Group	means CME and its subsidiary undertakings and associated undertakings
CME Shareholders	means the holders of CME Shares
CME Shares	means the shares of Class A common stock of par value $0.01 each in the capital of CME
Code	means the City Code on Takeovers and Mergers
Combined Company	means the combined company following the Acquisition, comprising the CME Group and the NEX Group
Companies Act	means the Companies Act 2006
Conditions	means the conditions to the Acquisition set out in Part A of Appendix I and to be set out in the Scheme Document
Confidentiality Agreement	means the confidentiality agreement entered into between CME and NEX dated 15 February 2018, as described in paragraph 13 of this Announcement
Confidentiality and Joint Defense Agreement	means the joint defense agreement entered into between CME, NEX and their respective external legal counsels dated 13 March 2018, as described in paragraph 13 of this Announcement
Co-operation Agreement	means the co-operation agreement entered into on 29 March 2018 between CME, Bidco and NEX and, relating to, amongst other things, the implementation of the Acquisition
Court	means the High Court of Justice in England and Wales
Court Hearing	means the hearing of the Court at which NEX will seek an order sanctioning the Scheme pursuant to Part 26 of the Companies Act
Court Meeting	means the meeting or meetings of the NEX Shareholders to be convened by order of the Court pursuant to Part 26 of the Companies Act for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment approved or imposed by the Court and agreed to by CME, Bidco and NEX) including any adjournment, postponement or reconvention of any such meeting, notice of which shall be contained in the Scheme Document
Court Order	means the order of the Court sanctioning the Scheme under section 899 of the Companies Act
CREST	means the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations)
Disclosed	means the information which has been fairly disclosed: (i) in writing prior to the date of this Announcement by or on behalf of NEX to the CME Group; (ii) in NEX's published annual or half year report and accounts for the relevant financial period or periods referred to in the relevant Condition and published prior to the date of this Announcement; (iii) in a public announcement by NEX prior to the date of this Announcement by way of any Regulatory Information Service; or (iv) in this Announcement
Effective	means: (i) if the Acquisition is implemented by way of the Scheme, the Scheme having become effective in accordance with its terms; or (ii) if the Acquisition is implemented by way of an Offer, the Offer having been declared or become unconditional in all respects in accordance with the requirements of the Code
Effective Date	means the date on which the Acquisition becomes Effective
Evercore	means Evercore Partners International LLP
Facility Agreement	means the facility agreement between CME, J.P. Morgan Chase Bank N.A. and Barclays dated 28 March 2018, as described in paragraph 11 of this Announcement
FCA	means the U.K. Financial Conduct Authority
Finance Documents	means the Facility Agreement and the fee and syndication letter
Forms of Proxy	means the forms of proxy in connection with each of the Court Meeting and the General Meeting, which shall accompany the Scheme Document
FSMA	means the Financial Services and Markets Act 2000
General Meeting	means the general meeting of NEX Shareholders (including any adjournment thereof) to be convened for the purpose of considering and, if thought fit, approving the shareholder resolutions necessary to enable NEX to implement the Acquisition, notice of which shall be contained in the Scheme Document
Irrevocable Undertakings	means the irrevocable undertakings given by the NEX Directors to vote or procure votes in favour of the Scheme at the Court Meeting and the resolutions to be passed at the General Meeting (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of the Offer), as detailed in paragraph 7 of this Announcement
J.P. Morgan	means J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Securities plc
KPMG	means KPMG LLP
Listing Rules	means the listing rules made by the FCA under section 73A of FSMA
London Stock Exchange	means London Stock Exchange plc
Long Stop Date	means 31 March 2019, or such later date (if any) as CME, Bidco and NEX may agree, with the consent of the Panel, and the Court may allow
MAR	means the E.U. Market Abuse Regulation
Meetings	means the Court Meeting and the General Meeting
Nasdaq	means the Nasdaq Global Select Market
New CME Shares	means the new CME Shares proposed to be issued to NEX Shareholders in connection with the Acquisition
NEX	means NEX Group plc, a public limited company incorporated in England and Wales with registered number 10013770
NEX ADR Holders	means holders of NEX ADRs
NEX ADRs	means sponsored American Depositary Receipts of NEX for which BNY Mellon is the Depositary
NEX Board	means the board of directors of NEX
NEX Directors	means the directors of NEX as at the date of this Announcement or, where the context so requires, the directors of NEX from time to time
NEX Final Dividend	means the final dividend of NEX in respect of the year ending 31 March 2018, such dividend not to exceed an amount of 7.65 pence per NEX Share
NEX Group	means NEX and its subsidiary undertakings and associated undertakings
NEX Shareholders	means the holders of NEX Shares from time to time
NEX Shares	means the ordinary shares of £0.175 each in the capital of NEX
NEX Share Schemes	means:   a)    the NEX Group plc 2016 Performance Share Plan;   b)    the NEX Group plc 2016 Deferred Share Bonus Plan;   c)    the NEX Group plc 2016 Senior Management Long Term Incentive Plan;   d)    the NEX Group plc 2016 Global Sharesave Plan;   e)    the ICAP plc 2015 Performance Share Plan;   f)     the ICAP plc 2015 Deferred Share Bonus Plan;   g)    the ICAP plc Senior Management Long Term Incentive Plan;   h)    the ICAP plc 2008 Sharesave Scheme;   i)     the ICAP 2003 Bonus Share Matching Plan;   j)     the ICAP Senior Executive Equity Participation Plan; and   k)    the Traiana, Inc. 2000 Stock Plan
NEX Special Dividend	means the dividend permitted to be declared by NEX, as further described in paragraph 2 of this Announcement
Offer	means, if the Acquisition is implemented by way of a takeover offer (as that term is defined in section 974 of the Companies Act), the offer to be made by or on behalf of CME, or an associated undertaking thereof (including Bidco), to acquire the entire issued and to be issued ordinary share capital of NEX including, where the context admits, any subsequent revision, variation, extension or renewal of such offer
Offer Period	means the period commencing on 15 March 2018 and ending on: (i) the earlier of the date on which the Scheme becomes Effective or the date on which the Scheme lapses or is withdrawn (or such other date as the Panel may decide); or (ii) the earlier of the date on which the Offer has become or has been declared unconditional as to acceptances or the date on which the Offer lapses or is withdrawn (or such other date as the Panel may decide), in each case other than where such lapsing or withdrawal is a result of CME or Bidco exercising its right to implement the Acquisition by way of an Offer
Official List	means the official list maintained by the U.K. Listing Authority pursuant to Part 6 of FSMA
Opening Position Disclosure	means an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position, as defined in Rule 8 of the Code
OTC	means over-the-counter
Panel	means the U.K. Panel on Takeovers and Mergers
Permitted Dividends	means (i) the NEX Final Dividend and (ii) any NEX Special Dividend
Quantified Financial Benefits Statement	has the meaning given in Part A of Appendix IV
Registrar	means the Registrar of Companies in England and Wales
Regulatory Information Service	means a primary information provider (as defined in the FCA's Handbook of Rules and Guidance), or an incoming information society service that has its establishment in an EEA State other than the U.K. and that disseminates regulated information in accordance with the minimum standards set out in Article 12 of Commission Directive implementing Directive 2004/109/EC
Relevant Authority	means any central bank, ministry, governmental, quasigovernmental, supranational (including the European Union), statutory, regulatory or investigative body, authority or tribunal (including any national or supranational antitrust, competition or merger control authority, any sectoral ministry or regulator and any foreign investment review body), national, state, municipal or local government (including any subdivision, court, tribunal, administrative agency or commission or other authority thereof), any entity owned or controlled by them, any private body exercising any regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body in any jurisdiction
Restricted Jurisdiction	means any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available to NEX Shareholders in that jurisdiction
Scheme	means the proposed scheme of arrangement under Part 26 of the Companies Act between NEX and Scheme Shareholders to implement the Acquisition to be set out in the Scheme Document, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by CME, Bidco and NEX
Scheme Document	means the document to be dispatched to NEX Shareholders including the particulars required by section 897 of the Companies Act
Scheme Record Time	means the time and date to be specified as such in the Scheme Document, expected to be 6.00 p.m. on the Business Day immediately preceding the Effective Date, or such other time as CME, Bidco and NEX may agree
Scheme Shareholders	means holders of Scheme Shares
Scheme Shares	means together:   a)    the NEX Shares in issue at the date of the Scheme Document and which remain in issue at the Scheme Record Time;   b)    any NEX Shares issued after the date of the Scheme Document and prior to the Voting Record Time which remain in issue at the Scheme Record Time; and   c)    any NEX Shares issued at or after the Voting Record Time and prior to the Scheme Record Time in respect of which the original or any subsequent holder thereof is bound by the Scheme, or shall by such time have agreed in writing to be bound by the Scheme and, in each case, which remain in issue at the Scheme Record Time, excluding, in any case, any NEX Shares held by or on behalf of CME or the CME Group at the Scheme Record Time
SEC	means the U.S. Securities and Exchange Commission
significant interest	means a direct or indirect interest in 20 per cent. or more of the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act)
U.K. or United Kingdom	means the United Kingdom of Great Britain and Northern Ireland
U.K. Listing Authority	means the FCA as the authority for listing in the U.K. when it is exercising its powers under Part 6 of FSMA
U.S. or United States	means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
U.S. Exchange Act	means the U.S. Securities Exchange Act 1934
U.S. HSR Act	the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976
U.S. Securities Act	means the U.S. Securities Act 1933
Voting Record Time	means the time and date to be specified in the Scheme Document by reference to which entitlement to vote at the Court Meeting will be determined, expected to be 6.00 p.m. on the day two days prior to the Court Meeting or any adjournment thereof (as the case may be)
Wider CME Group	means CME and its subsidiary undertakings, associated undertakings and any other undertaking in which CME or such undertakings (aggregating their interests) have a significant interest (in each case, from time to time) but excluding the Wider NEX Group
Wider NEX Group	means NEX and its subsidiary undertakings, associated undertakings and any other undertaking in which NEX or such undertakings (aggregating their interests) have a significant interest (in each case, from time to time) but excluding the Wider CME Group

 

 

All references to GBP, pence, Sterling, Pounds, Pounds Sterling, p or £ are to the lawful currency of the United Kingdom.  All references to USD, $, US$, U.S. dollars, United States dollars and cents are to the lawful currency of the United States of America.

 

All references to statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, amended, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validity therefrom.

 

All the times referred to in this Announcement are London times unless otherwise stated.  References to the singular include the plural and vice versa.

 

All references to "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given to them in the Companies Act.