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NZX Limited is in advanced discussions to sell its wholly owned registry business TZ1 Registry to Markit, a global financial information services company headquartered in the UK. The acquisition is expected to complete in the first quarter of 2009, subject to relevant board approvals and completion of bilateral due diligence.
TZ1 Registry is the arm of the wider TZ1 carbon market business that records carbon credit generation, purchase and retirement.
Markit is a leading provider of data, valuations and trade processing services for the over-the-counter (OTC) markets, including the OTC commodities markets. The company is credited with increasing transparency and reducing risk in the OTC markets.
NZX CEO Mark Weldon said, "NZX considered retaining TZ1 as a 100% owned subsidiary, based on our strong belief that the management team would continue to grow the business successfully from New Zealand. However, the opportunity to cement a transaction with Markit that retained a meaningful economic interest for NZX in the TZ1 Registry business, and to combine that with Markit's global reach and distribution networks, was compelling."
Under the terms of the proposed transaction, NZX will sell Markit 100% of the shares of TZ1 in exchange for consideration payable in Markit shares.
Lance Uggla, CEO of Markit, said, "In order for the market to trade environmental products, standards need to be set, and information provided to market participants by a trusted source. TZ1 has established itself as a key player in the carbon markets and we are delighted to partner with NZX in this exciting area. Combined with Markit, we will be able to facilitate the next important stage in the company's growth and help the markets to develop further by increasing transparency in the environmental markets."
Niall Cameron, Executive Vice President of Markit, said, "TZ1 has created a world-class brand in environmental credit registries and is a leading player in the development of standards in the US and UK. We see the TZ1 product, the team and its rapidly growing client base as a natural complement to our own global data offering."
"This transaction, its current value and upside potential to both parties, as well as the potential value of the Markit relationship to NZX, are all testament to the strategy developed by the TZ1 team, who have done a tremendous job building up the TZ1 business to global significance in a short period of time," said Weldon.
TZ1 CEO Mark Franklin said, "This is the right deal, at the right time, with the right structure, and the right partner. The TZ1 management team is confident of the prospects of the TZ1 Registry and believes that TZ1 will continue to deliver real economic value to NZX through to the final payout at the end of 2011. As a team we are proud of our product offering, and of the value created so far."
TZ1 Registry CEO, Helen Robinson said, "This is a great business, and we are excited to see it go to the next level in short order."
"NZX has a positive view of the long-term financial prospects of Markit and its business model," said Weldon. "Whilst the structure of this transaction will deliver short and medium term value to NZX, we also believe NZX will derive ongoing value from the Markit relationship."
