CBOT - Got Attraction?

Discussion in 'Wall St. News' started by chartie, Jun 28, 2005.

  1. chartie


    CBOT: received interest in 'combination'

    By Ros Krasny, REUTERS

    CBOT Holdings, fresh off a shareholder vote giving the green light for an initial public offering, said on Tuesday it has received "unsolicited, nonbinding expressions of interest in a business combination."

    The parent of the No. 2 U.S. futures exchange said in a press release it will consider the proposal as part of a broad review of strategic alternatives, including a possible acquisition, sale or other transactions, as well as the company's pending IPO.

    Shares in Chicago Mercantile Exchange Holdings Inc.(NYSE:CME - news), the parent of the CME, viewed by many as the most likely bidder for its former cross-town rival, soared a little over 6 percent to a new record high of $271.80 -- eclipsing the previous record of $265.80 set just last Thursday. The stock closed up 6.1 percent, or $15.50, at $271 on the New York Stock Exchange.

    Shareholders voted last week to let the CBOT issue additional shares in advance of a possible IPO, which the exchange plans to list on the New York Stock Exchange. The CBOT has set the IPO price range at $33 to $36 per share, regarded by some as on the low side.

    The CBOT said in late April it intended to pursue a public offering to be completed in the second half of the year, with an aggregate value of about $150 million.

    However, some think the proposed IPO could make the 157-year-old CBOT, which dominates trading in U.S. Treasury derivatives, an attractive takeover target instead.

    The Chicago Board of Trade has been careful to say in official releases that it might not, ultimately, complete its IPO.


    Cash-rich CME, the largest U.S. futures exchange, has been seen as an obvious candidate to partner with or buy the CBOT after beefing up its business relationship with the Board of Trade over the past few years.

    Other major global derivatives exchanges, including pan-European Euronext and Germany's Deutsche Boerse, have not been written off as potential bidders for CBOT.

    The Chicago Board Options Exchange, the largest U.S. options mart, also has been mulling the potential of taking a new strategic direction. A CBOE spokeswoman had no comment on any potential overture to the CBOT.


    Exchange watchers said a wild card is Australian private equity firm Caledonia Investments Ltd., which over the past year has bought a reported 70 full CBOT seats.

    The CBOT has 1,402 full memberships, which give the holder the right to trade all futures and options contracts at the exchange as well as to trade at the CBOE.

    A CBOT spokeswoman said she could not comment on memberships owned by specific companies.

    A CBOT full membership changed hands at $1.675 million on Tuesday, down from the record high of $1.75 million a week ago. Membership values have more than doubled in the past year. (Additional reporting by Megan Davies in New York)