New Exchange develops self-defense and is already the 3rd one of the world
DCI - 03/27/2008
The New Exchange (Nova Bolsa in Portuguese), the temporary name given to the company that will result from the integration between Bovespa Holding, the controlling company of the São Paulo Stock Exchange, and the BM&F (Brazilian Futures and Commodities Exchange), will be the second largest Exchange of the Americas and the third largest one in the world in market value, only behind the Deustche Börse and the CME (Chicago Mercantile Exchange). According to the data related to the closing price of the stocks from last 20th, Bovespa Holding and BM&F S.A. together are worth US$ 18 billion, exceeding the market value of Nyse Euronext, which is US$ 17 billion. On the same date, Deustche Börse was worth US$ 30 billion and CME, US$ 25 billion. "This market value does not take into account the appreciation this integration may generate", says Bovespa Holding's CEO, Gilberto Mifano. "The market is that will tell the real value of the Company", commented Manoel Felix Cintra Neto, Chairman of the board of directors of BM&F S.A.. The data from last Tuesday's closing shows that the market value of the New Exchange reached US$ 19.9 billion, remaining in third place in the world. Besides placing the Brazilian market of stocks and derivatives among the largest of the world, the merger of the exchanges protects them from possible purchase offers. "The size of the New Exchange by itself is already a natural barrier against a possible acquisition from another foreign Exchange", says Keyler Carvalho Rocha, professor of capital market at the Economics and Administration College of USP (University of São Paulo). The capital stock of the New Exchange will be divided in equal parts among the stockholders of Bovespa Holding and BM&F S.A.. Each party will hold 50% of the stocks of the future company. The agreement also foresees the cash payment of R$ 1.24 billion (US$ 704.5 million) by BM&F S.A. to the stockholders of Bovespa Holding. According to Bovespa Holding's Chief Executive Officer, Edemir Pinto, these resources will come from BM&F's available funds. The presentation, filed yesterday at the Brazilian Securities and Exchange Commission (CVM), informs that the relation of merger of the stocks of the companies for instruments of the New Exchange will follow the following criterion: each stock from Bovespa Holding will be equivalent to 1.424802 stock of the New Exchange plus R$ 1.7153 (US$ 0.975); and each stock from BM&F S.A. will be exchanged by one stock of the New Exchange. Edemir clarifies that this exchange of stock's relationship is valid for the holders of stocks of the companies at the date of the General Meeting in which the integration transaction will be voted, which is expected to occur in late April. "The stocks of the two exchanges continue being traded until the official constitution of the new company and its approval in a general meeting. The estimate is that the meeting for the approval of the integration be summoned in early April to take place in the last week of the month ", he said. The transaction still needs authorization from regulating agencies such as the CVM, the Central Bank, and the Administrative Council for Economic Defense (Cade).