New York's International Securities Exchange has confirmed that it is in advanced talks to be acquired by Deutsche Börse in a deal that could see its operations combined with the German exchange's Eurex subsidiary.
In a statement ISE says the transaction is still subject to the negotiation of final terms and documentation, as well as approval by its board of directors.
"Even if a definitive agreement is reached, consummation of a transaction would be subject to a number of conditions," says the statement.
The statement was released in response to press speculation about a deal between the electronic options trading market and Deutsche Börse.
ISE did not disclose the financial terms of the possible merger, but according to a Wall Street Journal report Deutsche Börse is looking to offer $68 per share for the electronic market, valuing the deal at around $2.6 billion.
The WSJ report, which cites people familiar with the matter, says Börse chief executive Reto Francioni will present the plan to acquire ISE at a supervisory board meeting today.
If the supervisory board agrees, the parties could move ahead with a deal quickly, says the report.
The acquisition would give the German exchange a strong foothold in the the US options trading business. ISE is the largest options market in the US for individual stocks and the second largest options market behind the Chicago Board Options Exchange (Cboe).
Deutsche Börse and other global exchanges are looking to expand into the options business, which has seen volumes increasing steadily in recent years. Earlier this month Nasdaq was reported to be looking into expanding in options trading by acquiring the Philadelphia Stock Exchange (PHLX), although a deal between the two exchange is still thought to be far off.
Nasdaq said last September that it would launch an equity and index options market in the third quarter of 2007. The move followed the launch of Nyse's options trading platform earlier in the year.