Eurex and ISE to Create Largest Transatlantic Derivatives Marketplace

  
    
  
  
    
      Eurex and International Securities Exchange (ISE) announced today that 
      they have signed a definitive agreement under which Eurex will acquire 
      ISE for approximately USD 2.8 billion in cash, or USD 67.50 per share. 
      The combination will be implemented by way of a merger and is subject to 
      approval by the holders of a simple majority (50 percent plus one share) 
      of ISE outstanding common stock at a special shareholder meeting to be 
      held as soon as practicable, receipt of regulatory approval by the U.S. 
      Securities and Exchange Commission and other customary closing 
      conditions. ISE’s Board of Directors 
      recommends to shareholders to vote in favor of the transaction.
    
    
      The transaction will create the largest transatlantic derivatives 
      marketplace with significant USD and Euro product coverage and with 
      significant operations and revenues in both the U.S. and Europe, the two 
      largest markets based on market capitalization. It will further 
      strengthen Eurex’s position as the leading 
      global derivatives marketplace and will create the undisputed market 
      leader in individual equity, equity index and interest rate derivatives 
      worldwide with a combined overall trading volume of 2.1 billion 
      contracts in 2006. Eurex’s and ISE’s 
      complementary member bases and product portfolios provide significant 
      growth opportunities across asset classes and national boundaries. 
      Further upside potential stems from joint product and business 
      development opportunities. ISE will continue to operate as a separate 
      entity under SEC regulation in its current governance structure and 
      under the ISE brand. ISE’s full management 
      intend to remain in their positions.
    
    
      Deutsche Boerse CEO Reto Francioni said: “This 
      transaction further expands Deutsche Boerse’s 
      leading position in the fast growing global derivatives markets. The 
      agreement is a strategic milestone for us that will further fuel our 
      strong growth prospects and create significant value for shareholders. 
      This transaction underscores our approach to combine strong organic 
      growth with value creating acquisitions.”
    
    
      “ISE and Eurex are partners with an excellent 
      strategic fit. Both are innovators of electronic trading in their time 
      zone, sharing the same management culture. We look forward to combining 
      our strengths to create a global marketplace,” 
      said Andreas Preuss, CEO of Eurex and a member of the executive 
      board of Deutsche Boerse. “The combination of 
      ISE’s leadership position in the U.S. equity 
      options market with Eurex’s global position 
      in Euro denominated fixed income, index and equity derivatives will 
      provide significant benefits to our customers.”
    
    
      “In founding ISE almost 10 years ago, we 
      transformed the U.S. options market,” said David 
      Krell, President and CEO of ISE. “Our 
      innovative products, electronic trading model, technology, market 
      structure and entrepreneurial organization have enabled us to remain at 
      the forefront of the options industry. Our principle strategic objective 
      is to further grow our business both in terms of new products and new 
      markets and in partnering with Eurex, we will be able to achieve our 
      goal. By completing this transaction, we will be positioned to build 
      upon ISE’s successful business model and to 
      solidify our future as an integral component of the largest 
      transatlantic derivatives marketplace.”
    
    
      Gary Katz, Chief Operating Officer of ISE, added, “We 
      have known the management team of Eurex for some time now and have 
      developed a strong working relationship with them. We also share a 
      common vision that the exchange model is evolving toward global, 
      multi-asset class, electronic marketplaces and our combination will 
      allow both of our organizations to remain at the forefront of this 
      competitive industry. Our cultural fit and common vision will serve as 
      the basis for our successful future collaboration.”
    
    
      “Our contribution to the ISE acquisition 
      demonstrates the SWX Group’s strategic 
      commitment to leveraging and expanding its international partnerships," 
      said Peter Gomez, Chairman of the SWX Group.
    
    
      Jürg Spillmann, Head of the SWX Group 
      Executive Committee and Deputy CEO of Eurex added: "The expansion of the 
      combined liquidity network of the fully electronic exchanges Eurex and 
      ISE will further enhance the leadership position by our joining forces.”
    
    
      ISE is the world’s largest equity options 
      exchange, providing electronic trading in USD denominated equity 
      options, index options and FX options. ISE’s 
      trading volume in equity options has grown at a 55 percent CAGR over the 
      last five years, outperforming the market for U.S. equity options. With 
      a share of 32 percent of the overall U.S. equity options market, ISE is 
      the market leader. ISE traded 600 million contracts in 2006 and has 164 
      member firms in the U.S. ISE recently launched a stock exchange and 
      operates an alternative markets platform, which will be further enhanced 
      as part of the Eurex group.
    
    
      Eurex, jointly owned by Deutsche Boerse and SWX Swiss Exchange, has a 
      diversified portfolio of Euro denominated fixed income, index and equity 
      derivatives. Since its inception in 1998 Eurex has grown to become the 
      largest derivatives market in the world. Eurex lists some of the world’s 
      most actively traded derivatives, including the global benchmark 
      products Euro Bund future and Dow Jones Euro STOXX 50 future. Eurex has 
      393 members in Europe, the US and Asia and traded 1.53 billion contracts 
      in 2006.
    
    
      Compelling strategic rationale for the transaction
    
    
      The merger of Eurex and ISE combines two of the fastest growing players 
      in the financial services industry, both with proven track records of 
      innovation. ISE pioneered electronic trading in the fast growing U.S. 
      equity options market and continues to show strong, positive financial 
      performance on the back of market leadership in the U.S.
    
    
      ISE’s extensive membership base will 
      significantly strengthen Eurex’s position in 
      the U.S.: 164 registered U.S. broker-dealers are ISE members while Eurex 
      currently has 63 U.S. members. It also adds 600 million traded contracts 
      to the number of contracts originated in the U.S.; at Eurex, 112 million 
      contracts originated in the U.S. ISE’s 
      product portfolio is fully complementary to that of Eurex and with the 
      acquisition Eurex is investing in a high growth business while further 
      balancing its product portfolio.
    
    
      The combined group will be the largest transatlantic derivatives 
      marketplace with powerful distribution capabilities in two of the world’s 
      most important capital markets. Its wide range of both USD and Euro 
      denominated products will be unique in the market: the combination will 
      be home to the Euro zone interest rate and equity index benchmark 
      derivatives products and will offer options on all major U.S. and 
      European companies. Combining the two companies offers huge growth 
      opportunities through cross selling of existing products in both 
      markets, as well as through the introduction of new products in the 
      future.
    
    
      The combination will create significant value for Deutsche Boerse 
      shareholders and SWX Swiss Exchange. Total estimated pre-tax synergies 
      of USD 50 million p.a. have already been quantified. 50% of the total 
      synergies will be achieved in 2010 and full run rate synergies in 2012. 
      Of the total some USD 15 million p.a. are attributable to efficiency 
      gains. An additional approximately USD 35 million p.a. come from revenue 
      synergies mainly through the cross selling of existing products. Both 
      partners strongly believe that the joint product development experience 
      and capability will result in further growth opportunities across asset 
      classes and geographies. This additional potential is not included in 
      the total synergies.
    
    
      The combination is well positioned to further expand its global network 
      of partners. It will feature the broadest geographic and product 
      coverage, strong functional and service knowledge and cutting-edge 
      technology.
    
    
      Transaction structure
    
    
      In the merger, Eurex will pay ISE shareholders USD 67.50 in cash for 
      each of their shares of ISE stock. The combination will be implemented 
      by way of a merger between ISE and a subsidiary of U.S. Exchange 
      Holdings Inc., itself a Eurex subsidiary. The transaction is subject to 
      approval by the holders of a simple majority (50 percent plus one share) 
      of ISE outstanding common stock at a special shareholder meeting to be 
      held as soon as practicable, receipt of regulatory approval by the U.S. 
      Securities and Exchange Commission and other customary closing 
      conditions. The partners expect the transaction to close in Q4/2007. ISE 
      expects to continue to pay a regular quarterly cash dividend in the 
      pre-closing period.
    
    
      Eurex will be the acquiring entity with its two parent companies 
      Deutsche Boerse AG and SWX Swiss Exchange providing the necessary 
      financing. Deutsche Boerse will contribute 85% of the total purchase 
      price and SWX 15% thereby remaining in line with the economic interests 
      that both companies have in Eurex.
    
    
      Deutsche Boerse is planning to finance its share of the purchase price 
      initially through a bridge loan facility of approximately EUR 1.5 
      billion (approx. USD 2 billion) and cash on hand at the time of closing. 
      This bridge loan will be taken out through retention of future earnings 
      of approximately EUR 200 million (approx. USD 270 million) and a mix of 
      senior and hybrid debt (approximately EUR 1.3 billion, approx. USD 1.77 
      billion). This long term financing structure assumes implementation of 
      the ringfencing structure currently under development as reported at the 
      annual results conference in February 2007. With this structure Deutsche 
      Boerse moves from a net cash to a net debt position thereby reducing its 
      cost of capital and thus increasing its capital efficiency. Deutsche 
      Boerse also plans to continue with its progressive dividend policy. 
      Share buy backs under its current capital management program will start 
      again once financial ratios are restored.
    
    Editor's Note:

Eurex and ISE will hold a joint briefing for the media

       Tuesday, 1 May 2007
       8:30 am - 10:00 am (EST)

       Location:    Waldorf Astoria Hotel
                    301 Park Avenue
                    New York, NY  10022
                    Empire Room


For journalists not able to attend in person, we have arranged
for a teleconference line.

       Teleconference call:   [phone] (USA)
                                    [phone] (International)
                                    Passcode 18 10 86 81
    
      Presentation materials for the briefing will be available in the 
      investor relations sections at www.deutsche-boerse.com 
      and www.iseoptions.com. A replay 
      of the teleconference call will be available from 10:30 am on May 1, 
      2007 until May 8, 2007 and can be accessed by calling [phone] 
      (USA) or [phone] (International) and providing the participant 
      passcode 38291262.
    
    Eurex and ISE will hold a conference call for investors/analysts

       Tuesday, 1 May 2007
       10:30 am - 12:00 am (EST)

       Teleconference call:   800-2 37 97 52 (USA)
                                    [phone] (International)
                                    Passcode 82 77 41 37
    
      Presentation materials for the conference call will be available 
      in the investor relations sections at www.deutsche-boerse.com 
      and www.iseoptions.com. A replay 
      of the teleconference call will be available from 12:30 pm on May 1, 
      2007 until May 8, 2007 and can be accessed by calling [phone] 
      (USA) or [phone] (International) and providing the participant 
      passcode 42770087.
    
    
      About Deutsche Boerse
    
    
      Deutsche Boerse, a member of the German blue chip index DAX® 
      and the largest exchange organization worldwide, is a leading service 
      provider to the global securities industry with products and services 
      for issuers, investors, intermediaries and data vendors. The Group 
      covers the entire securities process chain from trading over clearing 
      all the way to settlement and custody. Deutsche Boerse Group is also a 
      provider of IT solutions and an insourcing partner for the global 
      securities industry as well as a leading provider of market data and 
      analytics.
    
    
      Within the Group, Deutsche Boerse AG functions as the operating company 
      for the various markets and as the holding company for Deutsche Boerse 
      Systems AG, the Group's IT arm as well as Clearstream International 
      S.A., the settlement and custody operation.
    
    
      The Group’s major markets are the Frankfurt 
      Stock Exchange and the world’s leading 
      derivatives exchange Eurex. The company’s 
      global network connects over 2,000 banks, securities trading firms and 
      clearing and settlement firms worldwide to these markets.
    
    
      Deutsche Boerse AG is listed on the Frankfurt Stock Exchange and has an 
      international shareholder base. The group employs around 3.000 staff in 
      its global headquarters in Frankfurt as well as in Chicago, London, 
      Luxembourg and Zurich; the Group maintains representative offices in the 
      major financial centers worldwide.
    
    
      About Eurex
    
    
      Eurex, jointly owned and operated by Deutsche Boerse AG and SWX Swiss 
      Exchange, is the world's largest derivatives exchange. Eurex offers a 
      broad range of international benchmark products and operates the most 
      liquid fixed income derivatives markets in the world. With market 
      participants connected from locations all over the world, trading volume 
      at Eurex reached 1.53 billion contracts in 2006.
    
    
      In addition to operating a fully electronic trading platform, Eurex 
      provides an automated and integrated joint clearing house, Eurex 
      Clearing. Together with international trading houses, Eurex also 
      operates the electronic network (ECN) Eurex Bonds, an over-the-counter 
      market for integrated cash and derivatives trading in German Federal 
      bonds and Eurex Repo, the electronic trading solution for sale and 
      repurchase agreements. Together with Man Group plc, Eurex owns U.S. 
      Futures Exchange, aimed at expand the derivatives market by serving as a 
      product incubator and innovator to create new listed products.
    
    
      About ISE
    
    
      International Securities Exchange Holdings, Inc. (NYSE: ISE), through 
      its subsidiaries, operates a family of innovative securities markets. 
      ISE is founded on the principle that technology and competition create 
      better, more efficient markets for investors and consists of an options 
      exchange, a stock exchange and an alternative markets platform. ISE 
      continually enhances its trading systems and develops new products to 
      provide investors with the best marketplace and investment tools to 
      trade smarter.
    
    
      ISE developed a unique market structure for advanced screen-based 
      trading systems and in May 2000 launched the first fully electronic US 
      options exchange. Currently, ISE operates the largest U.S. equity 
      options exchange and is among the leading options exchanges in the 
      world. ISE offers index options, including a portfolio of proprietary 
      index products, and enhanced market data products for sophisticated 
      investors. ISE FX Options™ launched in the 
      second quarter of 2007.
    
    
      ISE Stock Exchange, launched in September 2006 with strategic partners, 
      includes an innovative MidPoint Match™ 
      platform which offers investors continuous price improvement. MidPoint 
      Match was integrated with a fully displayed Best Bid Offer market in the 
      fourth quarter of 2006.
    
    
      ISE’s alternative markets business currently 
      consists of an events market trading platform known as Longitude. 
      Longitude’s patented and proprietary 
      technology provides a unique parimutuel structure for derivatives 
      auctions which results in greater trading and pricing flexibility for 
      market participants.
    
    
      About SWX Swiss Exchange
    
    
      The SWX Swiss Exchange, a part of the SWX Group (a provider of 
      securities exchange services), is one of the world’s 
      leading and most technologically advanced securities exchanges. The 
      fully automated trading, clearing and settlement system remains unique 
      in the world. At the click of a mouse, an order is executed, cleared, 
      paid for and confirmed – all within the space 
      of 2 minutes, with an average of 2.3 million transactions each trading 
      day. The SWX Swiss Exchange offers its customers first-rate securities 
      exchange services and a broad range of investment products.
    
    
      www.swx.com
    
    
      LEGAL DISCLAIMER
    
    
      Proxy Statement
    
    
      ISE plans to file with the SEC and mail to its stockholders a Proxy 
      Statement in connection with a special meeting of stockholders to be 
      called to approve the merger. The Proxy Statement will contain important 
      information about ISE, the transaction and related matters. Investors 
      and security holders are urged to read the Proxy Statement carefully 
      when it is available. Investors and security holders will be able to 
      obtain free copies of the Proxy Statement and other documents filed with 
      the SEC by ISE through the web site maintained by the SEC at www.sec.gov. 
      In addition, investors and security holders will be able to obtain free 
      copies of the Proxy Statement from ISE by contacting Thomas Gibbons of 
      ISE at 60 Broad Street, New York, NY 10004, Telephone [phone].
    
    
      Participants in the Solicitation
    
    
      ISE and its executive officers and directors may be deemed, under SEC 
      rules, to be participants in the solicitation of proxies from ISE's 
      stockholders with respect to the proposed merger. Information regarding 
      the executive officers and directors of ISE is included in ISE's 
      definitive Proxy Statement for ISE's 2007 annual meeting, which was 
      filed with the SEC on April 3, 2007. More detailed information regarding 
      the identity of potential participants, and their direct or indirect 
      interests, by securities, holdings or otherwise, will be set forth in 
      the Proxy Statement to be filed by ISE with the SEC in connection with 
      the proposed merger.
    
    
      Forward-looking Statements
    
    
      Certain matters discussed in this press release are "forward looking 
      statements" intended to qualify for the safe harbor from liability 
      established by the Private Securities Litigation Reform Act of 1995. 
      These statements relate to future events or future financial 
      performance, and involve known and unknown risks, uncertainties and 
      other factors that may cause the actual results, levels of activity, 
      performance or achievements, to be materially different from those 
      contemplated by the forward looking statements. For example, (i) ISE may 
      be unable to obtain the stockholder approval required for the merger, 
      (ii) the regulatory approvals, including SEC approval, required for the 
      merger may not be obtained and (iii) conditions to the closing of the 
      merger may not be satisfied. In addition, additional factors that could 
      affect ISE's results, levels of activity, performance or achievements 
      and cause them to materially differ from those contained in the forward 
      looking statements can be found in ISE's filings with the Securities and 
      Exchange Commission, including ISE's annual report on Form 10-K, current 
      reports on Form 8-K and quarterly reports on Form 10-Q. ISE undertakes 
      no ongoing obligation, other than that imposed by law, to update these 
      statements.