When Caroline Silver helped negotiate a $2.2 billion price for the London Metal Exchange last year, she woke a moribund market for cross-border takeovers that may yield an $8.2 billion windfall for NYSE Euronext.
Silver, a 50-year-old banker at Moelis & Co., is advising on the proposed takeover of the New York Stock Exchange owner by IntercontinentalExchange Inc. (ICE), the 12-year-old energy and commodity futures bourse known as ICE. Her knack for sensing which deals will work bodes well for NYSE, according to clients she has worked with in the past.
“Her name should be changed to Caroline Gold,” said Michael Overlander, Sucden Financial Ltd.’s chief executive officer and a former director for LME and NYSE’s Liffe derivatives exchange. “Her understanding and her awareness of where everybody is within the world of commodity markets and financial markets is probably unsurpassed.”
Silver has been at the center of the biggest exchange deals for more than a decade, advising Euronext NV, then a union of the Paris, Brussels and Amsterdam markets, on its 2001 initial public offering and on its sale six years later to the operator of the NYSE. She helped Sweden’s OMX AB during its 2007 purchase by Nasdaq Stock Market Inc. and worked on Borsa Italiana SpA’s takeover by London Stock Exchange Group Plc. (LSE)
Antitrust concerns and political opposition have kept mergers among exchanges to a trickle, with more than $32 billion of deals failing to materialize since October 2010, according to data compiled by Bloomberg. The European Union blocked Deutsche Boerse AG (DB1)’s purchase of NYSE Euronext last year and Australian lawmakers vetoed Singapore Exchange Ltd.’s $8.3 billion bid for Sydney-based ASX Ltd. in 2011. LSE’s attempt to purchase TMX Group Inc. collapsed in June 2011.
ICE’s purchase of NYSE Euronext, uniting the world’s second-biggest futures market and the largest stock exchange by market capitalization, needs approval from European regulators. ICE and NYSE plan to spin off the Euronext markets, including bourses in Paris, Amsterdam, Brussels and Lisbon, the companies said in December.
“It’s a timely deal for NYSE and a well-thought-out proposal by ICE,” Silver said in a telephone interview. Jeffrey Sprecher, ICE’s CEO “is brilliant at seizing these moments of inflection,” she said. “This completes the asset suite. It’s a compelling deal for NYSE shareholders.”
NYSE Euronext has climbed 21 percent in New York trading this year and ICE has jumped 29 percent.
Moelis, ranked 33rd among global companies advising on mergers in 2012, is working for NYSE Euronext, along with Perella Weinberg Partners, Goldman Sachs Group Inc., Citigroup Inc. (C) BNP Paribas SA (BNP) and Blackstone Group LP. The New York-based firm now has 600 employees globally and is advising H.J. Heinz Co. on the ketchup maker’s proposed $23 billion acquisition by Berkshire Hathaway Inc. and 3G Capital Inc.
Over a 25-year career, Silver has become one of the most visible women in London finance, working as global vice chairman of investment banking at Morgan Stanley (MS) and Merrill Lynch’s vice chairman of investment banking for Europe, the Middle East and Africa. A graduate in English literature with Spanish from Durham University in northern England, she trained as an accountant before deciding the auditing was “very boring.”
“I like to make people smile,” Silver said. “On approaching a target, I sometimes might tell them: ‘It’s like taking a girl on a date. We don’t want you to rush us, but we do like to know the direction of travel. Are we at first kiss stage? Do you intend marriage? What are your intentions?’”
Jean-Francois Theodore, the architect of Euronext, remembers her advice when, in 2006, he had to decide between selling the company to Deutsche Boerse or NYSE. Silver told him to go with the New York-based suitor, arguing that antitrust regulators would block the German approach. He listened, and the deal was cleared.
“She’s precise, almost surgical,” Theodore said in a telephone interview. “I always prefer investment bankers who are certain rather than ones giving you advice on both sides.”
Silver won the mandate to represent the LME in its takeover negotiations after she impressed CEO Martin Abbott during an attempted transaction and after Chairman Brian Bender asked her to make a presentation to the board about clearing and developments in the industry.
“She clearly was extremely well plugged in to what was going on in the world of exchanges,” Bender said in an interview. “She knew all the players. She understood what had been going on, what was going on with Deutsche Boerse-NYSE.”
Silver’s tactics to obtain the best price were sometimes unorthodox. She placed Abbott in the bar of the Waldorf Astoria resort in Boca Raton, Florida, during the Futures Industry Association’s annual conference in 2012 where he met each potential bidder in plain view of the others.
The banker and her team attracted more than 10 potential suitors for the commodities-trading venue, resulting in Hong Kong Exchanges & Clearing Ltd. paying 180 times LME’s trailing 12-month net income, the most expensive of any $1 billion-plus exchange deal since at least 2000, data compiled by Bloomberg show. That helped persuade the 136-year-old LME’s shareholders such as JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc., Metdist Trading Ltd. and Sucden to sell.
Silver also knows how to say no to a proposal if necessary, according to Pierre Francotte, former CEO of Euroclear SA, Europe’s largest settlement agency who first met her in mid-2000 and who she advised for the next eight years.
“She’s sharp as a blade,” said Francotte, who now teaches at the Solvay Brussels School of Economics and Management. “She’ll come out of the meeting and say: ‘One, two, three; this is what’s going on.’ She had an incredible ability to translate the signals.”
Francotte recalled a deal in which Silver emerged from a meeting with the other side and told him it wouldn’t progress because they had decided to stall. There was another in which she advised him to drop the transaction as the price he would wind up paying didn’t justify the business, he said. He declined to identify the failed transactions on which they worked.
Magnus Bocker, CEO of Singapore Exchange, took her advice when, as chief executive of OMX, he sold the Nordic company to Nasdaq, the second-largest U.S. bourse.
“She’s very present when she’s giving you advice, giving no indication that she’s planning her next deal or has other transactions going on,” Bocker said in an interview. “She’s very loyal to her clients, and putting them first means not everyone necessarily appreciates that, especially not the other side. Caroline gave good financial advice, she is thoughtful about her client and is prepared to say both yes or no.”
In 2006, in the midst of a wave of attempted exchange consolidation in Europe and as Silver advised Euronext on its options, the banker also counseled Schering AG which was confronting an unsolicited bid from Merck KGaA.
Silver and her team negotiated a sweetened 17 billion euro offer from Bayer AG for Schering, creating Germany’s largest drugmaker and persuading Merck to accept the offer. She also helped secure Euronext’s sale to NYSE, despite a competing offer from Deutsche Boerse.
Not every deal Silver pursued went through. In 2004, Euronext’s Theodore, with Silver at his side, attempted to buy LSE and eventually failed. The banker spent months advising on the merger from her bed after breaking her leg skiing in British Columbia. The London-based exchange eventually rebuffed Euronext, along with four other suitors and remains independent.
Outside of exchange mergers, Silver is haunted by the failure of a 2006 bid for Prudential Plc. Aviva Plc, the U.K.’s biggest insurer at the time, withdrew its 16.2 billion-pound ($24.5 billion) offer after its smaller rival refused to enter merger talks.
“It’s my most painful moment,” she said. “We were bidding for the Pru and I regret we withdrew. Those of us involved still call it our whisky-bottle moment -- we take a sip now and then.”
Married for 26 years to the head of a business-services company, Silver is the mother of a 13-year-old son and a nine-year-old daughter. She sings in the elder’s school choir.
“Net-net, it’s been an advantage,” Silver says of being a woman in investment banking. “It’s a distinguishing factor in an endless sea of gray suits. You can be remembered. Of course if you get it wrong they will remember, but if you get it right they’ll remember too.”
Silver started her investment-banking career at Morgan Grenfell, “a nice British bank,” in 1987. She moved to Morgan Stanley in 1994, where she spent the next 14 years, followed by a stint at Merrill Lynch.
“It offered me the opportunity to focus on what I do best: giving independent, uncompromised advice, free from interference from other bits of the bank,” Silver said. “I can tell chief executives exactly what I think.”
She attributes her successes to patience.
“I like keeping it simple,” she said. “If it’s not going to work, I tend to tell people. Sometimes people want something so much, but just because they want it doesn’t mean it’s going to happen. I try to make it happen but I also try to give people clear advice.”