Indiana Grain Company, LLC

Posted: 07/12/10

By: tomgrisafi

In order to contribute to the fast-expanding global carbon market, on Thursday, IntercontinentalExchange Inc. completed the acquisition of UK-based Climate Exchange worth approximately $597 million.

The deal was announced on April 30, wherein it was decided that Climate Exchange shareholders will receive cash in exchange of each Climate Exchange share. The transaction consideration included $377 million from ICE's existing cash resources and $220 million from ICE's existing credit facilities.

Climate Exchange is a leader in the global emissions markets, and following the acquisition, it has become the wholly owned subsidiary of IntercontinentalExchange, operating under Climate Exchange's respective brand names. Further, the founder of Climate Exchange, Dr. Richard Sandor, will now play an advisory role in ICE.

IntercontinentalExchange had been sharing a long, innovative and productive partnership with Climate Exchange’s businesses. Climate Exchange is structured into three core businesses: European Climate Exchange (“ECX”), Chicago Climate Futures Exchange (“CCFE”) and Chicago Climate Exchange (“CCX”). IntercontinentalExchange has provided the electronic trading platform for CCX and CCFE since their launch in 2003 and 2004, respectively.

In 2005, IntercontinentalExchange and Climate Exchange co-developed and launched ECX and, in 2008, ICE transitioned clearing for all ICE Futures Europe and ECX to ICE Clear Europe. In March 2009, the company acquired The Clearing Corporation, which is the clearing house for CCFE.

With the acquisition of Climate Exchange, IntercontinentalExchange will be able to hold its footprint in technology, clearing and operations field, thereby, saving costs and increasing efficiencies; and enjoy productive leverages globally. It will also boost its capital and diversify ICE products by way of increasing scale of operations, distribution and cross-selling opportunities.

Source: ICE, Zack's Investment Research