By the time you read this New York Mercantile Exchange and CME Group members will have voted on their merger agreement and chances of approval are greater due to revisions to the agreement announced on July 18. CME Group and Nymex Holdings approved a revised merger agreement that increased the consideration payable to Nymex Class A members to $750,000 from $612,000 and allowed Nymex members to retain their membership rights.
Under the new agreement, Nymex seats are not being purchased; they are instead being left with the members. The members are essentially being paid $750,000 per seat to extinguish revenue sharing rights. If the deal goes through, Nymex members will still be able to lease their seats and will continue to have trading floor access and rights to trade, broker or solicit on the Nymex floor. Nymex also accepted the offer made by Chairman Richard Schaeffer, President and CEO James Newsome and other members of the executive management team to reduce their change in control severance benefits, which combined with the reduction of certain other merger-related expenses by Nymex equal approximately $30 million.
CME Group CEO Craig Donohue believes CME Group has addressed Nymex members’ reluctance about the original deal. “We’ve worked hard with the Nymex leadership and the Nymex community, which has resulted in the new revised offer. [We’ve] been getting a lot of positive feedback from the Nymex community [about the revised agreement],” he says. “There are no guarantees, but we feel very confident that these new terms will get the approval that we need,” says CME Group Executive Chairman Terry Duffy.
Nymex shareholders and members and CME Group shareholders vote on the transaction on August 18. To go through, the deal needs to be approved by a majority of the shareholders and 75% of the 816 Nymex members. Four proxy firms, Glass Lewis, Proxy Governance, Institutional Shareholder Services Inc. and Egan Jones recommended that CME Group and Nymex shareholders vote in favor of the deal, and many industry insiders believed the deal would happen.
