Exchange Wars: What Will NYSE Get From Qatar? (NYX, NDAQ, CME)

NYSE Euronext (NYSE Euronext: NYX) has signed a strategic partnership with the State of Qatar in a bid that may transform the Doha Securities Market.  The visibility is aimed to make Doha’s market an international player in the global exchange space and to give the NYSE Euronext with a foothold presence in the Middle East.  NYSE Euronext will purchase a 25% stake in the Doha Securities market for $250 million in cash (US Dollars), in what was said to be the most attractive offer as part of a competitive bidding process.

The State of Qatar and NYSE Euronext to build a new, internationally integrated cash and derivatives exchange in Doha. This will be aligned through equity participation, technology integration and market structure similarity.  The NYSE will get 3 of the 11 board seats on the exchange and the State of Qatar will retain 75% ownership and 8 of the 11 board seats.

This will enhance Doha’s existing cash equities business and provide a platform for derivatives trading and related clearing services.  The NYSE Euronext will act as a partner managing the operation of the new exchange and will appoint the senior management team and providing technology services.  After this is all said and done, Qatar expects to end up with a total market infrastructure capability and will solidify its position as a regional capital market.

The closing of the transaction is subject to regulatory approval and is expected to close during Q4-2008.

If you want to compare this implied $1 Billion market cap based upon the terms of the deal, that compares to a $15+ Billion market cap for NYSE Euronext and compares to a $5.98 Billion market cap for NASDAQ OMX Group Inc. (NASDAQ: NDAQ).  CME Group Inc. (NYSE: CME) has a market cap of $23.9 Billion as of last look.

Jon C. Ogg
June 24, 2008