CME Boosts CBOT Bid Again; Merger Approval Expected in Monday Vote

Chicago Mercantile Exchange Holdings [CME] increased its bid for CBOT Holdings by 7.1% to an exchange ratio of 0.375 shares (approx. $11.9b) on Friday, leading to what CME chief executive Craig Donohue described as "an absolutely overwhelming response (of approval) from CBOT shareholders." Rival bidder Intercontinental Exchange Inc. [ICE] has decided it won't counteroffer, according to a report in Monday's Wall Street Journal. CME still plans to pay a $9.14/share special dividend to CBOT shareholders. In a press release, CME-CBOT said Australia's Caledonia Investments PYT. Ltd., CBOT's largest shareholder, has announced it will endorse the revised bid, which CME said is its "best and final" offer. The merger is expected to be accretive to earnings on a cash basis within 12-18 months. CBOT shareholders are scheduled to vote on the merger with CME Monday afternoon; It is urging shareholders and members to vote in favor of the merger. Shares of CBOT climbed 8.7% to $224 on Friday. CME rose 3.4% to $574.80 and ICE gained 2.8% to $156.09.

Sources: Press release, Bloomberg, Reuters, Wall Street Journal
Commentary: Major Shareholder to Vote Against CME Bid for CBOT -- Reuters • ICE-CME Exchange Wars: A Mexican Standoff? • ICE-CME Exchange Wars Redux
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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