Source: Chicago Mercantile Exchange
Chicago Mercantile Exchange Holdings (NYSE/Nasdaq: CME) and CBOT Holdings (NYSE: BOT) today announced that they have revised the terms of their definitive merger agreement to increase the consideration CBOT shareholders will receive in the merger by increasing the exchange ratio from 0.350 to 0.375 shares of CME Holdings common stock for each share of CBOT Holdings common stock.
The revised agreement has been approved by the boards of directors of both companies.
Additionally, Caledonia Investments PYT. Ltd, CBOT's largest shareholder, has announced that it will endorse the revised merger agreement and fully support the strategic combination of CME and CBOT.
Following completion of the transaction, current CBOT shareholders will own approximately 36 percent of the outstanding shares of the combined company, up from approximately 35 percent in the existing agreement. All other terms of the existing merger agreement between the two companies remain the same, including the pre-close special dividend by CBOT Holdings to its shareholders of $9.14 per share, the post-close tender offer for up to $3.5 billion of shares of the combined company (or about 11.4 percent) at a fixed price of $560 per share and the terms of CME's purchase offer and minimum guarantee regarding the Chicago Board Options Exchange exercise rights.
CME also stated that the enhanced merger consideration constitutes a "best and final" offer. The special meetings of shareholders of CME Holdings and CBOT Holdings to approve the transaction and of members of CBOT to approve related matters are scheduled for July 9, 2007. When approved by the shareholders of CME Holdings and CBOT Holdings and the members of CBOT, the transaction would close in the next several days, subject to the satisfaction or waiver of other closing conditions. The CME Holdings special meeting is scheduled to be held in Chicago at 3:00 p.m. on July 9, 2007 at UBS Tower-The Conference Center, One North Wacker Drive. The CBOT Holdings special meeting is scheduled to be held at 3:00 p.m. on July 9, 2007 and the CBOT special meeting of members will be held at 2:30 p.m. on July 9, 2007, each at Union League Club of Chicago, 65 West Jackson Boulevard.
In light of this announcement, CME and CBOT urge shareholders and members to recognize the compelling immediate value and long-term benefits of the CME/CBOT merger. In that regard, the companies continue to expect the merger to be accretive to earnings of the combined company on a cash basis within 12 to 18 months and including the tender offer on a GAAP basis within 18 to 24 months.
"This enhancement to the terms of our merger agreement reflects our commitment to joining forces with the CBOT and our conviction that no combination can match the benefits we will create for all shareholders, members and customers," said CME Executive Chairman Terry Duffy. "The merger of CME and CBOT will create significant cost savings, preserve important core member trading rights, and generate exciting new growth opportunities. As the largest and most diverse exchange, the combined company will be a strong global competitor, and we look forward to aggressively pursuing our growth strategy."
"The merger of CME and CBOT is more compelling than ever," said CBOT Chairman Charles P. Carey. "The combination of CME and CBOT will create a global derivatives exchange that is unparalleled in scope, size and functionality, while the increase in the exchange ratio will provide our shareholders with significantly greater overall value. A combination of CME and CBOT will allow us to better compete in a rapidly changing global environment and will provide significant benefits to our shareholders, members, and customers. I urge our shareholders and members to vote for the merger at our special meeting on July 9."
"This enhanced offer further demonstrates our commitment to CBOT and this merger, and our excitement about the opportunities we will enjoy as a combined company," said CME Chief Executive Officer Craig Donohue. "We remain focused on financial discipline in any transaction we pursue, and our board has made it clear that this is our best and final offer for CBOT. We are pleased to have the support of CBOT's largest investor, and we have great confidence in the substantial value this combination can create."
"The combination with CME will create the most competitive global futures exchange, creating tremendous opportunities for growth, efficiencies and innovation," said CBOT President and Chief Executive Officer Bernard W. Dan. "The combined company will be the leading global derivatives exchange in all major asset classes and one of the world's most liquid marketplaces. Thanks to detailed integration planning and the hard work of our staffs over the last eight plus months, we are well positioned to capitalize on these opportunities beginning on Day One."
Shareholders and Members Urged to Vote "FOR" the CME/CBOT Transaction
Shareholders of record of CME Holdings and CBOT Holdings and members of CBOT are urged to vote "FOR" the CME/CBOT transaction at their respective company's July 9, 2007 special meetings. Shareholders or members who have not yet voted can do so in advance of the meeting by following the methods described below. Shareholders or members that have previously submitted a proxy for the meetings on July 9, 2007 do not need to submit another proxy or take any other action unless they desire to change their previous vote. Shareholders or members may change their vote at any time before their proxy is voted at the special meetings by the following the methods described below.
Shareholders of CBOT Holdings and members of CBOT may vote in advance of the special meetings or may change a previously submitted vote:
Separately, Caledonia Investments Pty. Ltd., the Sydney based investment group and largest shareholder of CBOT, today announced that they now support a CME/CBOT merger and encourage all other shareholders to vote "Yes" on July 9.
"We have always supported this merger from a strategic rationale and long- term growth perspective," said Will Vicars, Managing Director, Caledonia. "We continue to believe this combination makes massive sense for the industry, for the shareholders of both companies and customers. Now, with the CME's latest enhancement, we fully endorse this merger and will vote in favor of this transaction. This combination offers a better strategic growth proposition than any ICE proposal. While ICE may continue to try to enhance their offer, we believe a CME/CBOT combination offers the best opportunity for continued growth than any other combination this industry can possibly have."
CME and CBOT announced their merger plans in October. This week, CME increased the exchange ratio offered in its agreement to 0.3750 from 0.3500.