Cboe Expands in Canada With Deal to Buy NEO Parent Aequitas
(Bloomberg) -- Cboe Global Markets Inc. is expanding its Canadian operations with a deal to buy Aequitas Innovations Inc., parent of Toronto-based NEO Exchange.
The acquisition will help Chicago-based Cboe build its presence in North America by adding the registered Canadian securities exchange and related products, the companies said in a statement Monday. Terms weren’t disclosed.
Cboe already owns MATCHNow, the Toronto-based alternative-trading system it acquired in 2020. With both businesses, Cboe will have a combined market share in Canadian equities of more than 16.5%, along with market-data feeds, access services, listings and distribution services for non-listed securities, according to the statement.
Cboe wasn’t active in the corporate-listing space, so the deal will provide future issuers “full opportunities to access global capital,” John Deters, chief strategy officer at Cboe, said in an interview. Deters said Canada has more accommodating securities laws for businesses that allow them to access the market earlier, as well as a growing technology industry that has helped increase listings while other regions have seen a decrease.
“There’s a really interesting, burgeoning tech scene there that brings young companies to market,” Deters said. “It’s not a fluke. It’s a persistent theme that we’ve seen.”
The transaction will be financed with cash, supplemented by debt, if needed. The purchase is set to be completed in the first half of next year, the companies said.
This is the latest acquisition Cboe has announced in recent months as it seeks to expand its equities- and derivatives-trading networks across the globe. In October, the company said it would buy a cryptocurrency company, Eris Digital Holdings LLC, in a bid to expand into new asset classes. It’s also planning a new electronic-trading platform for U.S. Treasuries.
The NEO Exchange has operated since 2015 with business units across listings, trading and market data. Its sister company operates a distribution platform for unlisted securities, NEO Connect, that handles private placements.
NEO has been looking to expand both locally and internationally as its Canadian clients seek to tap global markets, NEO Chief Executive Officer Jos Schmitt said by phone.
The deal with Cboe provides “superb building blocks to expand our frame,” Schmitt said. “Where we have put all our focus is on the innovation economy. That is where we see a lot of activity,” including biotech, climate transition, and fintech.
Legal advisers to Cboe were Blake, Cassels & Graydon LLP, with TD Securities Inc. serving as financial adviser.
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