(Reuters) - U.S. exchange operator CME Group said on Thursday it had reached an agreement to buy Michael Spencer's NEX Group, valuing the British firm at about 3.9 billion pounds ($5.5 billion) and creating a cross-border trading powerhouse.
Shareholders in NEX, a financial technology firm that matches buyers and sellers of bonds, swaps and currencies, will receive 500 pence in cash for each NEX share and 0.0444 new CME shares. Each NEX share will be valued at 1,000 pence, CME said.
The offer by CEM, one of the world's biggest exchange groups and owner of the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange, represents a 2.9 percent premium to Wednesday's share close of 972 pence.
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NEX's shares rose 30 percent in 2017.
"This is a good price," Liberum analyst Justin Bates said, but added that the 50 percent cash component might disappoint some investors leaving "the door ajar for a competing offer with a higher cash component."
Attempts at major exchange mergers, such as the one between the London Stock Exchange (LSE) and Deutsche Boerse, have hit antitrust buffers in recent years, but CME's expansion by buying NEX could be easier for regulators and politicians to accept.
"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," CME Chairman and CEO Terry Duffy said.
CME said the deal would create significant efficiencies across futures, cash and over-the-counter (OTC) products.
The deal would also expand CME's international footprint in Europe, the Middle East and Africa and Asia Pacific, CME said, adding it expected the acquisition to generate run rate cost savings of $200 million by the end of 2021.
CME said the deal would add to its cash adjusted earnings per share from 2019, with a one-time cash cost of $285 million.
After the deal, NEX CEO Michael Spencer would join CME's board and become a special adviser to the firm, CME said.
NEX's directors intended to recommend the offer to shareholders, the exchange operator added.
"CME's decision to choose London as its European headquarters is also a signal of tremendous support for Britain's financial services sector," Spencer said.
NEX's headquarters would be combined with CME's in Chicago, while its European headquarters would be in London, CME said.
($1 = 0.7099 pounds)
(Reporting by Noor Zainab Hussain in Bengaluru. Editing by Jane Merriman and Edmund Blair)