Credit Suisse Says Nasdaq May Bid for TMX, CBOE Holdings

Nasdaq OMX Group Inc. may bid for TMX Group Inc. to block London Stock Exchange Group Plc’s agreement to buy the Toronto bourse, or pursue a deal with CBOE Holdings Inc., according to Credit Suisse Group AG.

Howard Chen, an analyst at Zurich-based Credit Suisse, estimated that Nasdaq OMX of New York might pay a 20 percent premium for TMX. With Chicago-based CBOE, Chen said the company could offer $34.40 a share. CBOE climbed 6.9 percent to $29.43 at 4 p.m. New York time.

The research report from Credit Suisse follows Deutsche Boerse’s Feb. 15 agreement to buy NYSE Euronext for $9.53 billion, creating the world’s largest exchange operator. Singapore Exchange Ltd. bid A$8.35 billion ($8.39 billion) in October for ASX Ltd., which runs the Australian stock market, and London Stock Exchange Group agreed Feb. 9 to pay C$3.2 billion ($3.15 billion) to buy TMX.

“Historically, exchange consolidation has come in waves,” Chen said in a report sent to clients today. “We see a high likelihood of at least 1-2 more deals over the coming months.”

TMX Chief Executive Officer Thomas Kloet declined to comment on Feb. 22 on a Globe & Mail report that the Toronto-based exchange owner had been in talks with Nasdaq OMX last year, before its agreement with the LSE.

Cost Cuts

“The merits of such a deal are rooted primarily in Nasdaq’s ability to realize expense synergies across the combined organization given the two companies’ geographical proximity with North America and mutual orientation toward cash equities,” Chen said.

Carolyn Quick, a TMX spokeswoman, and CBOE’s Gail Osten declined to comment on the Credit Suisse report. Nasdaq’s Frank De Maria didn’t respond to telephone and e-mail messages.

A Nasdaq takeover of CBOE Holdings would diversify revenue from equities trading by giving it a bigger share of the U.S. options market, Chen said. CBOE executives told directors that they are open to strategic partnerships, a person with direct knowledge of the discussions said Feb. 23. Chen raised his rating on CBOE to “outperform” today.

Credit Suisse also said that CME Group Inc. may see BM&FBovespa SA as “a potential merger partner down the road.”


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