Deutsche Börse and Clearstream will create the preeminent full service provider for the securities industry. The new entity will provide services and products throughout the securities industry beginning with trading and information products all the way to clearing and settlement. With Eurex as the world-wide leading derivatives exchange and Clearstream as pre-eminent global custody player, the new entity will position itself as the leading international market organization. This will result in the most efficient, lowest cost securities processing chain. Service levels will increase and the introduction of new products and services will be accelerated.
The combined entity will introduce a system of straight through processing and interoperability standards for European capital markets, open at each stage of the securities processing chain. The new entity will continue to strongly focus on customer demands and will give them the loudest voice in determining the future direction of the market's development.
The form of consideration is 100 percent cash including a share alternative, whereby Cedel shareholders may elect to receive up to an aggregate amount of eight million newly issued Deutsche Börse shares. This number can be increased if the Supervisory Board of Deutsche Börse so decides. These shares will be subject to a six-month lock-up period. The cash portion will be financed out of Deutsche Börse's existing cash; the incremental cash portion will be debt financed.
The terms of the offer had been agreed among the Board of Cedel and Deutsche Börse's Management Board on 1 February 2002; the Börse's Supervisory Board approved the offer on 18th February. It is subject to an affirmative vote by a two-thirds majority of Cedel shareholders and to certain further conditions, including merger control and bank regulator's approval in Luxembourg.
Deutsche Börse CEO Werner Seifert said, "This transaction will create superior value for all stakeholders. Cedel shareholders can convert an illiquid asset into cash or liquid Deutsche Börse shares at an attractive premium. The industry will receive better services and innovative products at lowest cost. Clearstream's employees will find new challenges and new options. Deutsche Börse will be transformed through the integration of Clearstream into an even more international company acting as the preeminent one stop handling agent for the securities processing chain thus creating value for its shareholders. The combined entity is keen to further contribute to the consolidation of European securities trading, clearing and settlement."
Commenting on the proposal, Robert Douglass, Chairman of Cedel International said, "The Board of Cedel has unanimously agreed to recommend to its shareholders the acceptance of this offer. We believe the proposal is in the best interests of our shareholders and for Clearstream's customers based on the many meetings we have held recently. I believe there is widespread understanding and support for the business logic behind the proposal and hence I am confident the shareholders will vote strongly in favor of the offer."
André Roelants, CEO of Clearstream International added, "I have met with many of our customers over the last few weeks in all parts of the world and they are consistently telling me that they are looking for the provision of high quality, low cost services in a competitive environment. The combined strengths of Clearstream and Deutsche Börse has the potential to deliver this and to create a level of integration that enables new innovations to be introduced in reduced time periods."
