C.M.E., C.B.O.T. clear to proceed with merger
June 12, 2007
by FoodBusinessNews.net Staff
CHICAGO — Chicago Mercantile Exchange Holdings Inc. (C.M.E.) and CBOT Holdings, Inc. (C.B.O.T.) announced they have received clearance from the U.S. Department of Justice to complete their proposed merger.
The ruling effectively thwarts the rival bid from the Intercontinental Exchange (ICE), which had claimed it would be better equipped than the C.M.E. to overcome antitrust regulatory hurdles.
Under the ICE proposal, issued in mid-March, C.B.O.T. shareholders would receive 1.42 ICE shares for each C.B.O.T. Class A share, a deal that was valued at approximately $11.2 billion.
The latest proposal from the C.M.E. would give C.B.O.T. shareholders 0.35 shares of C.M.E. Class A stock for each share of C.B.O.T. Class A common stock they own. In addition, the C.M.E. would make a cash tender offer for up to $3.5 billion of the common stock of the combined company at a fixed price of $560 per share. The tender offer would commence shortly after the closing of the merger. The C.M.E.’s offer is worth $10.3 billion.
C.B.O.T.’s board is recommending shareholders approve the C.M.E. offer, which is seen to provide greater stability and long-term value, when they vote on the deal July 9.
C.M.E. first agreed to purchase C.B.O.T. Holdings in October 2006.
"Only our merger allows shareholders and customers to benefit from the greater ability of a combined C.M.E. and C.B.O.T. to generate growth and achieve synergies with significantly lower integration risk," said Terry Duffy, executive chairman, C.M.E. "We look forward to completing our transaction and integrating our two exchanges."
Charlie Carey, chairman of the C.B.O.T., said the combined entity will position the group "to compete internationally and with the far larger over-the-counter market."