Intercontinental Exchange (ICE) shares rallied to $172.45 today, making the value of its offer for the Chicago Board of Trade $12.9 billion. Based on the most recent share price of the Chicago Mercantile Exchange...
Oh forget it!
Since ICE made its competing bid for the CBOT, chart watching has become a mild obsession and now that the CBOT and CME shareholders have approved their definitive merger agreement, I find myself in need of a fix. I am sure there will soon be new merger and acquisition proposals to follow as the New York Mercantile Exchange may be looking for a partner, ICE becomes a target and U.S. based options exchanges may begin to find partners.
Actually now that the music has stopped it will be nice to get some definitive numbers on the deal and not have to constantly rewrite stories and recalibrate numbers based on the most recent enhancement or stock fluctuations.
Throughout the CBOT courting process its Board of Directors seemed to treat the ICE proposal more as a nuisance—which I am sure it was at many levels— than an opportunity to get the best price for the exchange. But as CBOT Chairman Charlie Carey put it, in an interview with Futures, “Shareholders are entitled to ask for as much as [they] could get but the board had to look at the integration risk and the fact that clearing was already there.”
Nevertheless, Carey, the CBOT board and all its shareholders owe ICE and its entrepreneurial Chairman and CEO Jeff Sprecher a debt of gratitude. The value of the deal for the CBOT increased by approximately $3 billion from the original CME proposal in October of last year, and while the impressive growth of the CBOT would have probably forced the CME to up its bid somewhat, they would not have been pressed nearly as much.
In the end they both got what they wanted. And given what the ICE stock has done in the last two days, there is probably something to certain analysts’ argument that the ICE stock had a tendency to drop when it was the frontrunner for the CBOT and improved when people assumed the CME would win out.
In the end the CME had to pay up, which it did as a very tired Terry Duffy explained after staying up all night on July 5 to come up with their best and final offer. “I feel very good that we have answered all the concerns of the CBOT shareholders going back to the ERP, going back to the member protections as far as changing the governance of our board from a committee made up of board of directors for two years extending it to five years, adding another director to the combined company from nine to 10, giving a dividend of $9.14, giving the put on the ERP and now with an exchange ratio of .3750, yes I feel very confident of the support of the CBOT shareholders.”