Swiss bank UBS AG and Netherlands-based global banking group ABN AMRO said late last week that they have entered into an agreement under which ABN AMRO will sell its global futures and options business to UBS for $386 million in cash plus net tangible assets. The companies said closing is expected toward the end of the third quarter of 2006.
UBS said the acquisition positions the company as a "market leader" in the futures and options industry and as a "global provider" of execution and clearing services across multiple asset classes including commodities, equities, equity indices, interest rates and currencies. UBS said the acquisition also shows its continued commitment to the futures and options business by increasing its market share while creating platform scale and synergies. The ABN AMRO futures and options business provides clearing and execution services on a global basis.
No stranger to the markets, UBS in 2002 beat out Citigroup as high bidder for Enron Corp.'s once mighty wholesale energy trading unit (see NGI, Jan. 14, 2002).
"Today's announcement accelerates our organic growth strategy to become the 'scale' player in a market that continues to witness significant participant consolidation," said UBS Investment Bank CEO Huw Jenkins. "Expanding our global presence, client franchise and product offering, this acquisition confirms our commitment to grow our Prime Services business through investment in our North America, Asia, Emerging Markets and Commodities offering." Upon completion of the transaction, the assets will be integrated into the Prime Services business within the Equities business of UBS Investment Bank.
ABN AMRO said the sale follows a strategic review of the futures business, which found that the business was not core to the company's group strategy. "We serve a broad range of clients, but our strategic focus is on the mid-market segment where we can best leverage our local intimacy and global presence," the company said in a statement. "The futures business offered limited business opportunities with that core client base."
The sale will not affect the company's derivatives capabilities, ABN AMRO said, noting that increasing derivatives revenues remains a key goal for the bank.
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