CME-CBOT 99.999% Done! (CME, BOT, ICE)

The Chicago Board of Trade (BOT-NYSE) and the Chicago Mercantile Echange (CME-NYSE) are THAT much closer to closing their merger.  Unless the IntercontinentalExchange Inc. (ICE-NYSE) is able to pull an unexpected Hail Mary pass, this CBOT-CME combo is going to occur.   This is one of the top 10 issues for next week as the vote is on Monday, July 9, 2007.

A further reason to believe this deal is done is that the CME has sweetened its offer for the CBOT, and CBOT holders will now own 36% of the combined exchange rather than the prior 35% stake.  Unfortunately the ICE bid came in too late, because much of the integration had already been started.  These exchanges also recently received regulatory clearance for the merger.

The other issue is that traders on the floor (who own seats and shares of the exchanges) were much more supportive of the CME-CBOT tie up than they were the ICE offer.  More than money was at stake as operating history and location were/are a factor.  ICE had challenged the ‘better deal’ issue, but the largest holder CBOT shareholder Caledonia Investments is now recommending approval and ‘encourages all other shareholders to vote in favor of the CME-CBOT merger’.   Anyhow, unless a final Hail Mary pass is made this one is going in the history books.

CBOT (BOT) shares are indicated up almost 3% at $212.00, up at a new high and up 100% from the 52-week lows.  CME shares are indicated down less than 1% at $553.25.  Interestingly enough, IntercontinentalExchange Inc. (ICE) shares are indicated up 2% at almost $155.00. The ICE offer obviously came too late, but CBOT holders have to be thankful it came.

Jon C. Ogg
July 6, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.