CBOE IPO Terms Becoming More Clear (CBOE)

The initial public offering for the CBOE is coming closer.  CBOE Holdings, Inc. had an amended filing today.  While some of the terms are still outstanding, we now know how much is being sold by exchange members (selling holders) and how much will actually go into the company coffers.  The size of this underwriting offering is far larger than any deal seen in recent IPOs.  The exchange will trade on NASDAQ under the ticker “CBOE.”

The IPO is listed as 11,700,000 shares and the breakdown is 9,614,226 shares being sold by the company and 2,085,774 shares being sold by selling holders.  Here is the underwriting group:

• Goldman Sachs is the sole global coordinator of the IPO;
• The joint book-running managers are Goldman Sachs, Merrill Lynch, Barclays Capital, Citadel Securities, Citigroup Global Markets, JPMorgan Securities, and UBS.
• Co-Managers are BMO Capital Markets, Credit Suisse Securities, Morgan Stanley, Oppenheimer & Co., Raymond James & Associates, Cabrera Capital Markets, Keefe Bruyette & Woods, Loop Capital Markets, Macquarie Capital (USA), Rosenblatt Securities, and Sander O’Neill & Partners.

The net proceeds are earmarked for general corporate purposes, including two proposed tender offers for the CBOE outstanding Class A-1 and Class A-2 common stock.

The CBOE will have a dividend policy.  Stated was that it intends to pay regular quarterly dividends to stockholders beginning in the third quarter of 2010, with an annual dividend target of about 20% to 30% of the prior year’s net income adjusted for unusual items.

As far as the size of the CBOE in volume, it self-described the following:

• During 2009, the volume of options contracts traded at the CBOE was 1.13 billion, or 4.5 million contracts per day, and our leading market share in U.S. listed options based on contract volume was 31.4%. CBOE’s average daily trading volume was 4.7 million and 3.8 million contracts in 2008 and 2007, respectively. For the quarter ended March 31, 2010, our average daily trading volume was 4.5 million contracts per day, and our market share position was 30.0%.

The common stock to be outstanding immediately after this offering will be the following:

• 13,940,552 shares of unrestricted common stock;
• 44,323,803 shares of Class A-1 common stock;
• 44,323,803 shares of Class A-2 common stock;
• 102,588,158 shares of all classes of common stock

JON C. OGG