MICEX and RTS sign an agreement to merge

The MICEX and the RTS have announced the signing of a framework agreement to merge their businesses. The agreement determines the procedures for forming a single exchange holding. The signing of the agreement marks a new stage of the development of the Russian stock market infrastructure which implies the creation of an international leader prepared to compete with the world’s largest financial centers by the scale of the exchange and post-trading business, technological content, command expertise, standards and quality of service.

On the part of the MICEX the agreement was signed by the MICEX President Ruben Aganbegyan, representatives of Sberbank, the RF Central Bank, UniCreditBank, VEB and VTB. On the part of theRTS the agreement was signed by Chairman of the Board Roman Goryunov, representatives of Renaissance Capital, Troika Dialog, Aton, Da Vinci Capital and Alfa Capital.

The agreement is subject to approval by the RF Federal Antimonopoly Service and extraordinary general meetings of shareholders of the MICEX and RTS, scheduled for August 2011.

Key parameters of the deal:

The value of 100% of shares in the RTS, including preference shares: 34.5 billion rubles. 

The value of 100% of shares in the MICEX: 103.5 billion rubles. 

The assets that are involved in the RTS business but that are on the balance of the RTS will be transferred to the balance of the RTS. 

It is intended to complete corporate procedures relating to the merger of the two companies in early 2012.   The IPO of the combined exchange is planned for 2013.

The investment consultants of the MICEX are VTB Capital and Credit Suisse. The investment consultants of RTS the were Morgan Stanley, Troika Dialog, Alfa-Bank, Renaissance Capital, Da Vinci Capital, and Aton.

A management team of the combined exchange has been created as the first phase of the merger. The MICEX President Ruben Aganbegyan will be Chairman of the Board. He will be responsible for the development strategy and the creation of the exchange infrastructure that is necessary for the establishment of an international financial center in Russia. Chairman of the RTS Board Roman Goryunov will hold the position of First Deputy Chairman of the Board. His responsibilities will include the development of the markets of the combined exchange.

Significant attention will be paid to the integration process. As part of this process, working groups comprised of members of the two exchanges will be formed, which, being in close collaboration with users, will develop the configuration of the business of the newly created trading floor. An integration committee will be coordinating this work. This will create a vertically integrated holding company that will provide a unique range of services related to the organization of trading, clearing, settlement and depository services and technological services, with strong positions in Russia, Ukraine and Kazakhstan.

To make the merger open and transparent, a special web site has been launched: www.exchange-integration.ru. It presents information about the composition of the working groups and users’ committees, the calendar of events, presentation materials and other information.

According to the MICEX President Ruben Aganbegyan, the signing of the agreement opens up a new stage in the process of creating of a unified exchange in the Russian market: a leading player serving trading in all major types of asset classes. “The main goal of the merger is to create a globally competitive trading floor that gives advantages to market participants and shareholders and helps to reform the Russian financial market. The main positive results of the merger will be improved liquidity of the Russian market, better possibilities of expanding business implementing modern client technologies and IT platforms in Russia, as well as combining the experience and expertise of leading teams in the field of on-exchange trading. The merger is also a key step towards the creation of an international financial center,” noted Ruben Aganbegyan.

Chairman of the RTS Board Roman Goryunov believes that the combined exchange has all the prerequisites to become a nucleus of the Russian financial market. “We are facing a serious challenge to make the Russian exchange infrastructure attractive, convenient and, above all, necessary for Russian and foreign market participants, investors and issuers. This is a big challenge for us all. It is now important to create a united management team which will ensure the appropriate course of integration and build an effective model for the development of all markets and businesses of the combined exchange. It is also critical to maintain the momentum of our business development.”