NEW YORK IntercontinentalExchange Group Inc (ICE.N) said on Tuesday, less than a week after closing its $11 billion (6 billion pounds) takeover of NYSE Euronext, that it plans to spin off Euronext by next summer and to wind down the Big Board parent's technology business.
Expense savings from combining the companies are now expected to be $500 million, versus earlier estimates of $450 million, and the headcount of the merged company will fall to around 2,600 or 2,700, down from around 4,100 at present, ICE executives told analysts on a conference call.
ICE, which operates derivatives exchanges, clearing houses, and now equity exchanges, was started by Chief Executive Jeff Sprecher in 2000. It closed its acquisition to buy the parent of the New York Stock Exchange, which began with an agreement under a buttonwood tree on Wall Street in 1792, last Wednesday.
Part of the savings from the deal will come with the spinoff of Euronext, the operator of exchanges in Paris, Amsterdam, Brussels, London and Lisbon. That is expected to happen next summer through an initial public offering, Sprecher said. However, he did not rule out a sale of the unit.
"I suppose anything could ultimately happen, but our shareholders are going to want us to affect the highest-value transaction that is actionable in the shortest amount of time ... so it just seems to us that the best outcome is an IPO."
ICE has previously said it planned to spin off Euronext through an IPO, but the timeline was unclear, and sources have told Reuters that several other exchanges have approached ICE about buying the European exchange operator.
In the event of an IPO, ICE would retain a minority stake, Sprecher said, adding that several potential third-party shareholders had already expressed their interest.
ICE also plans to wind down NYSE's technology unit. ICE will continue to operate NYSE's U.S. and UK data centres, and market data distribution revenue will be moved to the exchanges.
"For the remaining businesses in NYSE Technologies, we believe the best way to grow these assets is to find a new home for them," Sprecher said. Those businesses include a buy-side sell-side network known as NYFIX, a data software business called Wombat, and a data dissemination business known as SuperFeed.
The main driver behind the NYSE deal, struck last December, was control of Liffe, Europe's No. 2 derivatives market. Liffe also has a U.S. business that ICE said it will wind down, moving the derivatives contracts to other exchanges.
ICE said it expects to realize $157 million deal costs in the fourth quarter.
ICE shares were up 0.9 percent at $205.04 on Tuesday morning on the New York Stock Exchange.
(Editing by Matthew Lewis)