As Chicago Board of Trade (CBOT) members and shareholders prepare themselves to vote on the Chicago Mercantile Exchange’s (CME) acquisition bid on Monday, July 9, management teams of both exchanges and that of the rival Intercontinental Exchange are making last ditch attempts to reach hearts and minds and sway votes.
On Wednesday, June 27, the ICE distributed a letter to CBOT members and shareholders entitled: Don’t be sold short by your board again -- stop CME from buying CBOT on the cheap. The letter urges members and shareholders to vote against the merger, arguing that the CME bid undervalues the CBOT, that ICE stock is a stronger currency than CME stock, and that CBOT/ICE integration risk is “red herring.” The letter concludes with a note that CBOT members can override a prior “yes” vote, and that only the latest vote would be counted.
That same day, the CBOT distributed a release entitled: ISS Recommends CBOT Stockholders Vote for Merger with CME, which argues that the ICE is less capable of handling the CBOT’s trading and clearing volume, and that the monetary difference between the bids is marginal. The release ends urging a vote for the CME merger.
On Monday, June 25, the ICE mails definitive proxy statement to cbot stockholders urging they vote against the proposed CME acquisition, urging a vote against the CME bid.
That same day, the CME sent out a letter entitled “Setting the record straight on the CME/CBOT merger: know the risks of dealing with ice,” in which Terry Duffy, CME chairman, and Craig Donohue, CME CEO, again made the points that, in their opinion, the ICE bid is based on an inferior currency. The letter also contains supporting quotes from several stock analysts. Additionally, they assert that the ICE does not have the technological capabilities to manage the trading and clearing volumes that the CBOT would present. Finally, they say that the ICE bid undervalues the exercise right privileges that CBOT full members have at the Chicago Board Options Exchange (CBOE). The release ends urging a vote for the CME merger.
On Friday, June 22, Duffy and Donohue had distributed another letter asserting that The CBOT/CME merger provides significantly more value and immediate growth opportunities with the lowest risk. The letter contains the CME’s detailed account of the benefits of a merger with the CME.
