IntercontinentalExchange Makes Unsolicited Takeover Bid for CBOT; Shares Jump

IntercontinentalExchange announced in a press release Thursday morning that it is making an unsolicited, stock-for-stock takeover bid for the Chicago Board of Trade. The bid values CBOT at a price of $187.34 per share, giving shares a premium of 12.8% (yesterday's closing price was $166). If approved, the merger would create the world's most comprehensive derivatives exchange; CBOT already merged with the Chicago Mercantile Exchange last year. In its press release, Intercontinental proposed the following terms: it would issue 1.42 ICE shares for each CBOT Class A common share. In addition, the new company would remain based in Chicago and CBOT shareholders would own approximately 51.5% of the combined company. Shares of CBOT climbed $21.97, or 13.23%, to $188.06 in pre-market action. In earlier IntercontinentalExchange-related news, the company disclosed it was buying an 8% stake in India's National Commodities and Derivatives Exchange from ICICI Bank Ltd., a private Indian Bank whose ADRs trade on the NYSE. Financial terms weren't disclosed but ICE's 2006 annual report says it bought an 8% stake in a foreign company for $36.3 million in December.

Sources: Press Release, Reuters, Wall Street Journal
Commentary: CME/CBOT Merger Creates World's Biggest Derivatives Exchange • CBOE-ISE Face-off in Court Over the Future of Options Exchange Trading in a Case With Huge Repercussions • A Look At Stock Exchange Stocks
Stocks/ETFs to watch: CBOT Holdings (BOT), Chicago Mercantile Exchange Holdings (CME), International Securities Exchange (ISE), ICICI Bank Limited (IBN). Competitors: Nasdaq Stock Market Inc. (NDAQ), NYSE Group (NYX), NYMEX Holdings (NMX), HDFC Bank Limited (HDB).

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.