Upstart energy exchange IntercontinentalExchange Inc on Thursday offered to buy futures market CBoT Holdings Inc for $9.9 billion, besting an existing take-over offer from Chicago Mercantile Exchange Holdings Inc.
ICE, an afterthought in the exchanges business just five years ago, has emerged recently as a force in commodities trading, and a combination with the Chicago Board of Trade's parent would make it one of the world's largest financial derivatives markets.
Should the unsolicited bid succeed, shareholders of CBoT, the No 2 US futures exchange, would get both a premium over the current CME terms and a majority stake in the combined company. ICE Chief Executive Jeffrey Sprecher would hold the top job in the combined exchange, but many top CBoT executives and some directors would retain their jobs, in contrast to the CME-heavy management proposed for the merged CME-CBoT.
Sources at the Futures Industry Association meeting here said terms of the proposal were slipped under the door of CBoT chief executive Bernard Dan's hotel room overnight. CBoT cancelled a planned media briefing early Thursday as its executives disappeared from view.
ICE's all-stock bid values CBoT at $187.34 a share, compared with the $169.53 a share, or $8.96 billion, offered by CME, based on the closing price Wednesday. But Sprecher told reporters that ICE could put up to $3 billion in cash in as well, if needed.
The combined company would be based in Chicago, where Sprecher recently bought a house and where ICE is building a data center. "We are confident that the CME/CBoT merger will create a strong combination and provide significant and unique benefits to shareholders and customers," CME Chief Executive Craig Donohue said in an e-mailed statement.
Under Thursday's proposal, CBoT's derivatives trades would be cleared at the New York Board of Trade clearing house. ICE bought NYBOT, a small exchange that trades mostly soft commodities such as coffee, cocoa and sugar, in January.