Back to top

Intercontinental to Consolidate Fixed Income Market Trading

Read MoreHide Full Article

Intercontinental Exchange Inc. (ICE - Free Report) has agreed to acquire TMC Bonds LLC for $685 million in cash. The transaction, pending regulatory approval, is expected to culminate in the second half of 2017.

TMC Bonds, a premier fixed income marketplace, was established in 2000. The trading platform facilitates click-to-trade and request-for-quote in asset classes like Municipals, Corporates, Treasuries, Agencies and Certificates of Deposit.

The addition of TMC Bonds will consolidate Intercontinental Exchange’s fixed income market trading. The acquirer will benefit from TMC Bonds’ new and complementary access point to liquidity for customers. Also, the buyout will expand Intercontinental Exchange’s portfolio of diverse solutions in the global fixed income markets across analytics, execution and post-trade.

Nonetheless, the acquisition is unlikely to impact results or capital returns in 2018.

On the other hand, TMC Bonds will enjoy superior workflow solutions by deploying Intercontinental Exchange’s compelling data and analytics.

Carrying a Zacks Rank #3 (Hold), Intercontinental Exchange as a securities exchange has a solid track of strategic buyouts, including TMX Atrium, National Stock Exchange and VirtuBondPoint among others. Several strategic acquisitions have not only expanded Intercontinental Exchange, but have also resulted in expense synergies. Management is on track to achieve at least $30 million in expense synergies by the end of this year.

The most significant of these deals is the acquisition of NYSE in Nov 2013, which cemented Intercontinental Exchange’s position as a premier stock trading platform. The takeover also transformed the company into the second-largest global exchange group, thus allowing over 60% accretion in market capitalization.

Per ICE President Benjamin Jackson, “the fixed income markets continue to automate and migrate to electronic trading.” The move to acquire TMC Bonds thus bears a testimony to the diversifying aims of the company to emerge in rapidly growing markets.

Shares of Intercontinental Exchange have rallied 17.4% in a year, compared with the industry’s gain of 30%. We expect successful integration of acquisitions, organic growth initiatives, strong operational performance and solid capital position to drive its shares higher.


Stocks to Consider

Better-ranked stocks from the finance sector are Cardtronics PLC (CATM - Free Report) , CME Group Inc. (CME - Free Report) and FleetCor Technologies, Inc. (FLT - Free Report) .

Cardtronics provides automated consumer financial services through its network of automated teller machines (ATMs) and multi-function financial services kiosks. The company delivered an average positive surprise of 27.17% for the last four quarters. The stock sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CME Group operates contract markets for the trading of futures and options on futures contracts worldwide. The company’s average positive surprise is 1.86% for last four quarters. The stock has a Zacks Rank #2 (Buy).

FleetCor provides commercial payment solutions in North America, Latin America, Europe and Australasia. The company delivered an average positive surprise of 2.94% for the last four quarters. The company carries Zacks Rank of 2.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like