CME Bids Higher for CBOT AND Itself

Stock Tickers: CME, BOT, ICE, ISE, NMX, NYX, NDAQ

The Chicago Mercantile Exchange (CME-NYSE) decided it was not going to let the Chicago Board of Trade (BOT-NYSE) get acquired by The IntercontinentalExchange Inc. (ICE-NYSE).   This is further proof that the "Exchange Wars" are heating up, and that the value of exchanges is still there.

The CME is revising its offer by 16% to .35 shares and CBOT holders will own approximately 34.6% of the combined company.  The board of directors will also hav3 10 of the 30 seats filled with CBOT members.

To top it off, and to act as the final "you can’t compete with this offer" the CME has announced that it will make a cash self tender offer for approximately 12% of the combined company at a fixed price of $560.00 that will commence shortly after the close of the merger.  What that does is essentially takes some of the market risk out of the CME stock since this is an all stock deal.  That is a $3.5 Billion tender.

Both companies had already spent much time and money on the merger, and this should provide a lock-up for the deal.  IntercontinentalExchange (ICE) will have a hard time being able to compete with this, although its shares are now up 1.4% at $136.71.  CBOT (BOT) shares are up 2$ at $197.95 pre-market; CME (CME) shares are up 6% at $528.50 pre-market.

This is also spilling over into the other excnages, and here are their gains pre-market: NYMEX Holdings (NMX) up 1% at $120.50, International Securities Exchange (ISE) up 0.1% at $65.10, NYSE (NYX) up 0.7% at $82.38, and NASDAQ (NDAQ) unchanged at $31.53.

Jon C. Ogg
May 11, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.