(Bloomberg) -- Cboe Global Markets Inc. is sticking to its focus on organic growth in the wake of Hong Kong Exchanges & Clearing Ltd.’s failed bid for London Stock Exchange Group Plc.
“Our disciplined approach to M&A hasn’t changed,” Cboe CEO Ed Tilly said in emailed remarks. “We’re always assessing the industry landscape but are more focused right now on organic growth, where we think we’re well-positioned.”
HKEx’s $36 billion offer for LSE underscored the momentum toward industry consolidation as profit pressure mounts along with the demands of new technology. LSE is now pressing ahead with its $27 billion deal for data firm Refinitiv. Euronext NV has expressed interest in “transformational” deals and Deutsche Boerse AG has a war chest of around $2.2 billion; Singapore Exchange Ltd. says it’s eyeing acquisitions in fintech and those that complement its existing capabilities.
Cboe’s last major deal was its $3.2 billion purchase of Bats Global Markets Holdings Inc., agreed in 2016, just a few months after Bats went public. Bloomberg News reported in February that Cboe was considering buying Bids Trading LP, which runs one of the largest U.S. dark pools.
Cboe’s shares have risen about 20% year to date, roughly in line with the S&P 500. Rivals Intercontinental Exchange Inc. and CME Group Inc. are up about 25% and 10% respectively. It is rated “buy” by seven analysts tracked by Bloomberg, with eight “holds” and one “sell.” the consensus target price is about $122, versus the stock’s close Wednesday at $116.64.
Analyst Alex Kramm of UBS Group AG rates Chicago-based Cboe a “hold” given a forecast that transaction fees will move lower, and volume for proprietary products may be pressured in the near-term.
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