CBOE Holdings Inc., owner of the largest U.S. options exchange, is poised to acquire Bats Global Markets Inc., the nation’s second-largest stock exchange operator.
The $3.2 billion cash-and-stock deal, which was announced Monday and still requires the approval of shareholders and regulators, has yielded roles for at least three Am Law 100 firms. If completed, CBOE’s new president and COO will be Chris Concannon, a former Morgan, Lewis & Bockius associate currently serving as CEO of Bats.
The Lenexa, Kansas-based target, a digital exchange operator that uses high-speed trading technology to keep trading costs low, raised $252.7 million through an initial public offering earlier this year that saw Davis Polk & Wardwell take the lead legal advisory role for Bats. The firm also represented Bats on its 2013 merger with electronic exchange rival Direct Edge Holdings LLC, a deal that vaulted the combined company past Nasdaq in the stock exchange space.
Davis Polk corporate partners Leonard Kreynin and Lee Hochbaum—both of whom handled the Direct Edge deal—are currently heading up a team counseling Bats on its proposed sale to CBOE that includes executive compensation partner Jean McLoughlin, tax co-head Neil Barr and regulatory partner Annette Nazareth and counsel Zachary Zweihorn. Davis Polk associates Dylan Consla, Reid Fitzgerald, Kay Ng and Travis Triano are also working on the matter.
The New York Times reported Monday that Bats had not actively been looking to sell itself, but CBOE has been seeking a partner to expand its trading scope. The Chicago-based CBOE, which still utilizes open-outcry trading pits, owns the Chicago Board Options Exchange. The acquirer said in a statement Monday that it plans to utilize Bats’ electronic trading technology and migrate trading to a single platform.
In absorbing Bats, whose general counsel is Eric Swanson, CBOE will expand its trade offerings in the U.S. and Europe. CBOE’s current CEO, Edward Tilly, will remain head of the combined company.
Sidley Austin corporate partners Thomas Cole—a former leader of the firm—and Beth Peev are advising CBOE on the transaction along with employee benefits co-leader Matthew Johnson and associate Christian Pilhofer. R. Eden Martin, a former Sidley partner and current of counsel at the firm, serves as an independent member of CBOE’s board of directors. (Dentons senior counsel Roderick “Rick” Palmore and Greenberg Traurig of counsel Samuel Skinner, chair of his firm’s Chicago government law and policy practice, also serve on the board at CBOE, whose general counsel is Joanne Moffic-Silver and chief compliance officer is Alexandra Albright.)
Fried, Frank, Harris, Shriver & Jacobson corporate partners Philip Ricther and Steven Scheinfeld are working with special counsel Brian Blitz in advising Bank of America/Merrill Lynch as financial adviser to CBOE on its bid for Bats. The financial services giant is providing $1.65 billion to help finance the transaction, which CBOE expects to close in the first half of 2017.
The proposed union between CBOE and Bats is the latest in a spate of exchange consolidations. In June, a pair of Magic Circle firms clinched roles on the $30 billion merger between the Deutsche Börse AG and London Stock Exchange Group plc.