Mumbai: Intercontinental Exchange Inc., the world's second-largest energy futures market, has made an unsolicited offer to buy the Chicago Board of Trade for $9.9 billion in stock. The offer of 1.42 Intercontinental shares for each CBOT share values the company at $187.34 a share or 13 per cent above the previous closing price.
Chicago Mercantile Exchange Holdings Inc. cash-and-stock purchase, agreed upon in October, was worth $8.9 billion or $169.53 a share as of March 14, 2007. The Intercontinental bid is seen as an effort to thwart Chicago Mercantile's planned purchase.
Intercontinental chief executive Jeffrey Sprecher said he could even provide cash to some holders of CBOT shares.
Atlanta-based Intercontinental, owner of London's biggest oil exchange and the market for 45 per cent of global oil futures trade, said a combination would generate at least $240 million in annual savings.
The proposal would also avoid possible US antitrust concerns raised by the Chicago Mercantile deal, it added.
CBOT's revenue and profit surged last year on record trading of its financial futures and options and other products. Through February trading was up 21.4 per cent compared with the same period last year.
A total of 805.9 million contracts traded hands on the CBOT last year, up 19.5 per cent from 2005. Average daily volume was 3.21 million contracts, of which 2.54 million were financial products, including futures and options on US bonds, interest-rate swaps, and the federal funds rate.
Intercontinental, which began as an electronic trading system for gas and power transactions, generates revenue through clearing private party transactions and from its UK-based ICE Futures exchange, which dominates trading of Brent crude oil.
It completed a $1.8 billion purchase of the New York Board of Trade in January, gaining an expanded offering of commodity futures and a clearinghouse. CBOT does not have its own clearing house and uses facilities of Chicago Mercantile Exchange.