ICE sparks a bidding war for Chicago Board of Trade

0 Comments | Deseret News (Salt Lake City), Mar 16, 2007

CHICAGO (AP) -- The 159-year-old Chicago Board of Trade found itself the target of a possible bidding war Thursday when electronic futures market IntercontinentalExchange Inc. made a surprise $9.9 billion all-stock bid, threatening its deal to merge with the crosstown Merc.

Investors pushed the shares of parent CBOT Holdings Inc. to a record high in anticipation of a sweetened offer by Chicago Mercantile Exchange Holdings Inc.

The unsolicited bid by Atlanta-based ICE, a relative upstart in the futures and commodities industry, comes less than three weeks before CBOT shareholders are scheduled to vote April 4 on an all- Chicago deal. The Merc's parent company and its century-long rival agreed last October to unite and form the world's largest futures exchange, with CME paying $8 billion.

The proposed new combination would create a derivatives leader with about a third of the U.S. market in commodities trading. It would be smaller, however, than a Board of Trade-Merc powerhouse, which has raised concerns about the potential for a monopoly and higher prices amid careful scrutiny by the Department of Justice.

The new offer, while not immediately accepted or rejected by the Board of Trade, amounts to what at least one analyst called a "semi- hostile" bid.

"ICE's bid very much complicates the CME bid," said Robert Rutschow of Prudential Equity Group in a note to investors. "The big winner in this seems to be CBOT shareholders, who could pressure either a higher bid from CME, and at a minimum have more strategic options going forward."

Shares of CBOT jumped $28.86, or 17.4 percent, to close at $194.95 on the New York Stock Exchange. ICE fell $3.83, or 2.9 percent, to $128.10, while CME shed $31.09, or 5.5 percent, to $532.88.