• 10 Jul 2007 at 12:56 PM
  • Chicago

Exchange Love Triangle: Chicago Exchanges to Merge

Chicago Board of Trade 2.jpgChicago Board of Trade shareholders accepted an $11.8bn merger proposal from the Chicago Mercantile Exchange yesterday, ending nine months of negotiations and an unremitting rival bid from IntercontinentalExchange. The results of yesterday’s shareholder vote, which will create the world’s largest futures exchange, were announced simultaneously by CBOT and CME last night.
CME Group will come into being next year and, continuing the industry’s amalgamative trend, is likely to pursue exchanges in New York and London.
Left out in the cold after an expensive campaign for CBOT, ICE is now a potential takeover target for New York Stock Exchange Euronext, Bloomberg News reports. According to Will Vicars, director of Caledonia Investments, NYSE Euronext’s “modus operandi to date has been acquisitions, and I think that will probably continue.”
Chicago Exchange Merger May Bring More Deals [Dealbook]
CME Acquisition of CBOT Turns Nymex, ICE Into Takeover Targets [Bloomberg]
CBOT-CME Is Done, at Last [Wall Street Journal]
CME and CBOT Shareholders Approve Merger [Chicago Board of Trade]

  • 06 Jul 2007 at 12:22 PM
  • CBOT

Exchange Love Triangle: Merc Ups Offer Before Shareholder Vote

Chicago Board of Trade 2.jpgWith a shareholder vote on Monday, the Chicago Mercantile Exchange increased its bid for the Chicago Board of Trade again today, all but securing a deal set to create the largest derivatives exchange in the world.
The new Merc bid is valued at $11.3bn, still short of the rival $11.4bn offer from the Atlanta based IntercontinentalExchange, but enough to win the support of Caledonia Investments, a major CBOT shareholder that previously resisted the Merc’s advances. The CBOT board has favored the cross-town merger since talks began last October and both CBOT and CME believe enough shareholder support now exists to push the deal through.
Unable to take a hint, ICE sent a letter to top CBOT officials on Tuesday saying it would consider sweetening its bid, the Wall Street Journal reports. Nonetheless, expect a new Chicago superexchange to come into being on Monday.

CME Sweetens CBOT Bid Ahead of Next Week’s Vote
[Wall Street Journal]

  • 21 Jun 2007 at 3:05 PM
  • Chicago

Exchange Love Triangle: Strong Words From ICE

Chicago Board of Trade 2.jpgIntercontinentalExchange made another move to block the Chicago Mercantile Exchange’s bid for the Chicago Board of Trade today, this time sending a letter to all CBOT shareholders calling the potential merger a “bargain basement sale.” Last week ICE filed a preliminary proxy statement with the SEC after CME upped its offer to $10.6bn, still $1.3bn short of ICE’s rival bid. CBOT shareholders are scheduled to vote on the deal July 9.
Although the CBOT board has said repeatedly that it favors the Merc offer, citing an easier integration of the two Chicago-based exchanges, the letter from ICE CEO Jeffery Sprecher extols the undisputed pecuniary superiority of his offer, saying,

The fact is that your Board has endorsed a deal with CME that undervalued the CBOT from the outset. And, since ICE’s first proposal, CME’s offer has never been financially superior. After saying repeatedly that it would not increase its offer, CME was forced to improve its proposal in reaction to the innovative value enhancements offered by ICE. Despite your Board’s best efforts to convince you otherwise, CME’s proposal remains 12.5% below the value of the ICE offer.

ICE Urges CBOT Stockholders and Members to Reject Sale to CME

  • 18 Jun 2007 at 4:04 PM
  • CBOT

Overpaying for CBOT

How much is the Chicago Board of Trade really worth? The Chicago Mercantile Exchange upped its offer for the world’s oldest futures and options exchange, this time raising its bid by 14% to $11.7bn. This comes only days after the Merc offered a $485mn dividend to CBOT shareholders.
The rival bidder, Intercontinental Exchange still has an $11.8bn offer on the table and last week filed a preliminary proxy statement to stop a CBOT-Merc merger. Art-Deco façade included, CBOT has a market value of $10.9bn.
Howard Simons, president of Illinois-based Rosewood Trading Inc. said, `Whoever winds up buying the Board of Trade is going to have a moment of buyer’s remorse because it’s almost like they are forcing each other into overpaying.”
CME, Intercontinental Exchange May Sweeten CBOT Bids [Bloomberg]

  • 14 Jun 2007 at 12:12 PM
  • Chicago

Chicago Merc Raises Bid

[From Senior Chicago Correspondent Peter Ribic:]
Chicago Mercantile Exchange Holdings, the largest U.S. futures exchange, said this morning that it would increase its $10.19bn bid for Chicago Board of Trade Holdings by throwing a $485mn dividend to CBTH shareholders into the deal ($9.14-per-share). The Wall Street Journal reports that CBTH favors this offer over IntercontinentalExchange Inc.’s share-based bid valued at $11.09bn. ICE says it will launch a proxy fight to stop the Merc deal when CBTH shareholders vote on the acquisition July 9.
Earlier this week, The Department of Justice tentatively approved the offer, saying it did not raise anti-trust concerns.
This morning, ICE shares rose 1.5% to $150. CBOT lost 0.2% to $201.10 and CME shares dropped negligibly to $551.17.
Chicago Mercantile Exchange To Sweeten Bid for CBOT [WSJ]
Chicago Mercantile Exchange Ups Bid for CBOT [NYT]

Trader Monthly (a long-term investing publication) submits that Chicago, and not New York, is the “greatest trading city in the world.” Discuss. (And see related).
Chicago is “greatest trading city” [Reuters]

Just so you know:

The lease of four downtown Chicago parking garages to Morgan Stanley will go forward despite objections raised because of the company’s alleged ties to slavery.
In a 37-to-8 vote, the Chicago City Council approved the 99-year lease of the garages to the huge banking concern.
Alderman Dorothy Tillman says she will go to court to block the deal.
Under a city ordinance sponsored by Tillman in 2002, a company that falsely claims no past connections to slavery loses its city contracts.
Tillman contends the disclosure requirement applies to Morgan Stanley because it is a successor firm of J-P Morgan and Company.
But Corporation Counsel Mara Georges says there is no direct tie. She says three mortgage bankers who had been employed by J-P Morgan joined mortgage bankers from another firm to form Morgan Stanley.

Okay. So Morgan Stanley’s ties to slavery are pretty tenuous. They allegation stems from the discovery by Tillman’s daughter that Riggs, Peabody and Co., a predecessor of J.P. Morgan Chase, allowed 13,000 slaves to be used as collateral on loans and wound up owning 1,250 slaves when those loans went south. Morgan Stanley split from JP Morgan back in the thirties. So technically there are some ties there.
But then again, Morgan Stanley is going to pay hundreds of millions to Chicago for those leases. And at least 37 Chicago city councilfolks think that’s a whole lot more important than slavery.
Despite alleged ties to slavery, Morgan Stanley gets Chicago contract [Associated Press in WQAD]