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Chicago Mercantile Exchange Holdings Inc. [CME] sweetened its offer last Friday for CBOT Holdings Inc., operator of the Chicago Board of Trade, to $9.21 billion from $7.91 billion, intensifying competition with Atlanta energy market IntercontinentalExchange's [ICE] $10.12 billion bid. CBOT has indicated it is prepared to accept CME's revised offer -- although the market prefers the ICE bid, since ICE is growing fast and the CME deal will face tough antitrust scrutiny. CME had little choice but to up the ante, since ICE's all-stock bid has risen sharply in value as its shares have gone up over the past two months. CME's new offer will give CBOT shareholders 0.35 share of CME Class A common stock for each of their CBOT Class A common shares. They will hold 34.6% of the combined company rather than the 31.2% originally offered. Further, CME will make a cash tender offer for up to $3.5 billion of the new company's common shares for $560 a share, representing a 12% buyback. "ICE continues to believe the combination of CBOT and ICE offers CBOT shareholders and members greater immediate and long-term value as well as better growth prospects than its acquisition by CME," ICE said in a statement following CME's announcement of the new offer. CME shares rose 7.7% Friday, ICE shares rose 4.2% and CBOT shares rose 3.8%.

Sources: Wall Street Journal, MarketWatch (I, II), Reuters, Forbes
Commentary: CBOT Favors ICE Over CME, May Stay Independent -- PapersCBOT Taking ICE Offer Seriously: Money TalksCBOT Members Believe CME Partnership is Right, Price is Wrong
Stocks/ETFs to watch: IntercontinentalExchange, Inc. (NYSE:ICE), CBOT Holdings, Inc. (BOT), Chicago Mercantile Exchange Holdings Inc. (NASDAQ:CME). Competitors: NYMEX Holdings Inc. (NMX), International Securities Exchange Inc. (ISE), Nasdaq Stock Market Inc. (NASDAQ:NDAQ), NYSE Euronext (NYSE:NYX). ETFs: PowerShares Dynamic Mid Cap Growth (PWJ), PowerShares Dynamic Aggressive Growth (NYSE:PGZ)

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Source: CME Sweetens Offer for CBOT; ICE Considers Its Position