It seems that the long quest of the Chicago Board Options Exchange is going to end up in an IPO. The demutualization process has been an ongoing one and a filing from the company today confirmed what we have expected for months and months (or years). The company’s board of directors has approved plans to pursue an underwritten initial public offering of common stock of CBOE Holdings Inc. The CBOE has long been the recognized ‘brand’ for options trading, but there is competition in options and derivatives from the NYSE Euronext, Inc. (NYSE: NYX) and Nasdaq OMX Group Inc. (NASDAQ: NDAQ)… and somewhat from the IntercontinentalExchange, Inc. (NYSE: ICE).
The company noted in the filing that it is the intent that CBOE’s demutualization and IPO take place concurrently, with the simultaneous events being in the best interest of CBOE owners. This is of course subject to a member vote in favor of demutualization, but since every exchange IPO has generated vast returns our take is that the vote will be over 90% in favor of the demutualization and IPO.
The completion of both the demutualization and the IPO is expected to be by the end of the second quarter of 2010. Shares issued in the offering will be shares of common stock of CBOE Holdings, Inc. and the exchange will use the proceeds from the shares sold by the company for general corporate purposes. Those purposes include the repurchase of shares of the common stock issued to CBOE members in the demutualization and issued to those members of the settlement class who received stock under the settlement agreement.
The CBOE said it plans to give a detailed timeline for the demutualization “in the near future.” For any formal IPO an S-1 has to be filed with the SEC, and the CBOE noted that it anticipates filing the S-1 at the end of the first quarter of 2010.
Another exchange will be coming public…. If it isn’t acquired first.
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Jon C. Ogg
December 10, 2009
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