In the end, Nymex members and shareholders approved their acquisition by the CME Group, with 78% voting in favor of the merger, exceeding the 75% minimum required. The deal closed on Friday, Aug. 22.
The deal consolidates more than 98% of the U.S. futures market at CME. Initially Nymex members balked at the amount of the bid, which valued Nymex at $120 per share, below a then recent high of $130. The exclusivity of the bid and the lack of a collar on the value of the stock swap were the next issues raised as CME stock declined to $325 in mid-July, when the agreement was revised, from $449 in mid-March, when the definitive agreement was entered. Lawsuits were filed when enormous Nymex executive and board member payouts were revealed. But CME executives worked with critics and influential members in the days leading up to the vote, bending ears and arms to get the thing done.
With more than 60% of Nymex shareholders requesting CME stock, the stock was over subscribed. They will receive $7.29 in cash and 0.2164 shares of CME Group Class A common stock, plus additional cash in lieu of any fractional shares. Those requesting cash received $81.16 per Nymex share.
Nymex Class A members received $750,000 to extinguish certain membership rights, including royalties to be paid to members for electronic markets with more than 90% volume trading electronically, as described in Section 311(G) of the Nymex bylaws. Members also retain the right to use or lease their memberships for Nymex open outcry and electronic trading purposes. The Nymex trading floor will remain open until Dec. 31, 2012. If the trading floor occupancy agreement is terminated, a trading floor will be maintained elsewhere in New York City for as long as profitable. The deal is expected to save $60 million annually in cost synergies and to be accretive in 12 to 18 months.
Bryan Durkin, CME’s managing director and chief operating officer will lead the global integration effort. De'Ana Dow and Bo Chambliss are now managing directors, government relations. Sean Keating is now managing director, Nymex operations. The combined company had pro forma annual revenue of $2.7 billion in 2007, and for the first half of 2008, the average trading volume was 14.2 million contracts per day.
