The Chicago Mercantile Exchange and CBOT have announced revised terms of their merger agreement.
Under the terms of the revised agreement, CBOT Holdings shareholders will receive 0.3500 shares of Chicago Mercantile Exchange Holdings Class A common stock for each share of CBOT Holdings Class A common stock-a 16% increase from the original terms of the merger agreement.
The move by the CME is largely seen as an attempt to ward off rival offers, especially from Intercontinental Exchange (ICE), which came through with an unsolicited bid in March that was dismissed by CBOT as “not superior.”
“The Board and Management of CME and CBOT recognize the tremendous potential for value creation in a merger of our two companies,” said CME Executive Chairman Terry Duffy. “We believe there is strong support for the combination from shareholders and members of both companies, and these revised terms and the cash tender offer makes our already compelling transaction even more attractive. Since we announced the original agreement last October, both CME and CBOT have delivered strong financial performance and volume growth, underscoring the strategic rationale for bringing these two great Chicago institutions together. We look forward to completing this merger and realizing the full benefits for customers and shareholders of both companies.”
“After a thorough review of ICE and careful consideration of its proposal and the revised proposal from CME, the Boards of CBOT Holdings and the CBOT concluded that the revised merger agreement with CME offered greater overall benefits for our shareholders and members,” said CBOT Chairman Charlie Carey. “Our Boards and advisors carefully reviewed both the short-term and long-term value of both transactions. A combination with the CME will create the most extensive and diverse global derivatives exchange, transforming global derivatives markets and creating efficiencies for customers and members while delivering significant benefits to shareholders. In addition, given our common clearing arrangement with CME and the CME Globex electronic platform, we believe a combination with CME presents significantly less integration risk than a combination with ICE. We look forward to the July 9th vote and to completing the transaction as soon as possible after the vote.”