CME, ICE Bids for CBOT Expected to Enter Round 3 -- Bloomberg

Bloomberg reports both the Chicago Mercantile Exchange [CME] and Intercontinental Exchange [ICE] are set to sweeten their offers for the Chicago Board of Trade [CBOT]. Shares of CBOT rose 1% to $206.98 on Friday, setting a new all-time high. Two CBOT investors told Bloomberg that CME executives contacted CBOT shareholders last week about making a higher bid and were told to boost their offer by 14% to $11.7b (from $10.3b prior). CBOT now has a market cap over $10.9b. ICE's latest bid values CBOT at $11.8b. Bloomberg mentions sources say ICE is not considering raising its stock ratio of 1.42 in a revised bid, but is looking at sweetening the payout some CBOT investors will receive involving settling a dispute over ownership rights of the Chicago Board of Options Exchange. Full CBOT members with exercise rights would receive as much as $800,000 (vs. $500,000 prior), compared to the CME's $250,000 offer based on a $485m ($9.14/share) special dividend and another $250,000 to those who sell their exercise rights. Shares of ICE climbed 7.8% to $156.98 last week, while the CME rose 0.6% to $552.70 and CBOT gained 4.3%.

Sources: Bloomberg
Commentary: CME Counters ICE's Enhanced Bid For CBOT With Special Dividend Offer -- WSJ • Who Will Acquire CBOT Holdings? • CBOT To Launch Cash-Settled Credit Default Contract
Stocks/ETFs to watch: CBOT Holdings, Inc. (BOT), Chicago Mercantile Exchange Holdings Inc. (CME), IntercontinentalExchange, Inc. (ICE). Competitors: NYSE Euronext (NYX), NYMEX Holdings Inc. (NMX), International Securities Exchange Inc. (ISE)

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Comments

[Victor J.Cook, Jr.]

Maybe the Boards of CBOT Holding and CBOT should reconsider their assessment of the ICE offer. See "Exchange Wars: ICE vs. CME" at financial.seekingalpha... for an analysis of the unanticipated consequences of either alternative.