This morning the Chicago Mercantile Exchange settled a lawsuit filed in Delaware Chancery Court. The suit, filed on behalf of the Louisiana Municipal Police Employees’ Retirement System (LAMPERS), names the CBOT Holdings Inc. and its directors as well as CME Holdings Inc. and its directors, and says that the CBOT board of directors failed in its fiduciary duty to shareholders.
The settlement stipulates a special one-time cash dividend of $9.14 per share, totaling $475 million, be paid to CBOT shareholders. The agreement was announced shortly after the leadership of the CBOT and the Chicago Mercantile Exchange (CME) announced the second substantial revision to their definitive merger agreement.
“We believe the litigation played a material part in influencing the board’s decision to up their offer and to enhance the deal to the level that they did; $9.14 per share is a huge, huge, huge amount,” says Michael Barry, partner at law firm Grant & Eisenhofer P.A., which represented Louisiana Municipal Police Employees’ Retirement System (LAMPERS). “It’s a great result and the pressure exerted through litigation really helped tilt the scales and got them to move.”
CBOT Holdings Inc. says it is not a party to the LAMPERS settlement agreement and that the agreement is between LAMPERS and CME Holdings only. In a statement to the press, Peter B. Carey, Attorney for CBOT Holdings and its board said, “CBOT Holdings continues to deny that it, or its directors, have any liability whatsoever to LAMPERS. As a practical matter, LAMPERS willingness to dismiss its lawsuit against CBOT Holdings, with a full release of CBOT from any liability, acknowledges the propriety of the CBOT Board’s process and its business judgments regarding the proposed CME/CBOT merger.”
The suit was originally filed in mid March and requests for expedited discovery were granted after the CBOT board announced its decision to back the CME offer, Barry says. “The CME deal, with the enhancements announced today, is a very good proposal and most importantly the shareholders are going to be able to consider it. There are no impediments to that. We think the disclosers and the enhanced considerations go a long way to addressing the claims that we had prosecuted in the law suit.”
A spokesperson for the Chicago Mercantile Exchange confirmed that the dividend would be paid by the CBOT before the consummation of the merger. The Chicago Board of Trade has not responded to requests for comment.
