Mumbai: The Chicago Merchantile Exchange (CME), the world's largest futures exchange, is in talks to acquire Nymex Holdings Inc. that operates the New York Mercantile Exchange (Nymex), for more than $11 billion.

CME has proposed to pay Nymex shareholders $36 in cash and 0.1323 of a share of CME Group's common stock for each Nymex share. The cash and stock offer values Nymex at about $119 a share, or slightly more than $11 billion.

CME Group expects to maintain trading floors in the New York City metropolitan area post merger. The proposed deal also contemplates that Nymex will repurchase the 816 New York Mercantile Exchange memberships upon closing of the potential acquisition for an aggregate purchase price not exceeding $500 million.

The two exchanges have agreed to a 30-day exclusive negotiating period.

Discussions are in early stages and the terms of transaction may differ in the course of discussions. The transaction also remains subject to negotiation of other terms, completion of due diligence, negotiation of terms of a definitive agreement and approvals of the boards of directors of both companies, the two said in a release.

CME Group, formed in 2007 by the merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), is the world's largest and most diverse exchange. CME Group brings together buyers and sellers around the world on the CME Globex electronic trading platform and on its trading floors. (See: World''s largest exchange is born as Chicago Board of Trade - Chicago Mercantile Exchange merge) CME offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, agricultural commodities, and alternative investment products such as weather and real estate.

NYMEX Holdings Inc. operates the New York Mercantile Exchange Inc., the world's largest physical commodities exchange, trading in futures and options in energy and metals contracts and clearing services for more than 350 off-exchange energy contracts.

NYMEX uses a hybrid model of open outcry floor trading and electronic trading on CME Globex and NYMEX ClearPort, and offers crude oil, petroleum products, natural gas, coal, electricity, gold, silver, copper, aluminum, platinum group metals, emissions, and soft commodities contracts for trading and clearing virtually 24 hours each day.

Under a 2006 agreement with Nymex, CME Group's Globex system handles more than half the trading in Nymex energy and precious metals contracts.

The combination would extend CME Group's reach into the of energy and metal futures contracts. The merger, which would add to CME's dominance in financial and agricultural futures, however, any lead to a monopoly, observers say.

Exchanges, riding a merger wave following the recent corporatisation of the once non-profit institutions, have announced more than $41 billion worth of mergers and acquisitions since the start of last year. NYSE Euronext agreed this month to acquire the American Stock Exchange for $260 million while Nasdaq Stock Market Inc. agreed in November to buy the Philadelphia Stock Exchange for more than $600 million.

CME Group and Nymex are expected to save $100 million in combined costs. The merger would also reduce cost for customers across asset classes and time zones.