ICE chief, CBOT pitch members on merger

ICE chief, CBOT pitch members on merger

	Published : Fri, 01 Jun 2007 00:10 By : Agencies Print this Story

CHICAGO (AP) - Top executives behind the two rival offers for the Chicago Board of Trade made separate appeals to members of the venerable exchange Thursday as the competition to buy CBOT heated up.

The dueling pitches came with shareholders of Board of Trade parent CBOT Holdings Inc., many of them traders at the exchange, scheduled to vote in less than six weeks on whether to accept a $9.8 billion bid by Chicago Mercantile Exchange Holdings Inc.

While CBOT has endorsed the pairing with its crosstown counterpart, the Merc's offer is under increasing pressure in the face of an $11.2 billion offer by IntercontinentalExchange Inc., a comparative upstart in the commodities and derivatives business.

Touting the ICE offer in a meeting with BOT members in a Chicago hotel ballroom, ICE Chief Executive Jeffrey Sprecher emphasized that not only is the exchange offering 14 percent more than the Merc, its proposal would retain the Board of Trade's tradition and continuity. He reiterated a pledge that the company would stay headquartered in Chicago, keep the exchange's name and remain majority-owned by Board of Trade shareholders.

'The ICE proposal is strong and it's been carefully considered,' Sprecher said, in prepared remarks that received solid applause. 'It offers many benefits to the members, the shareholders, the employees and the global trading community. It provides the opportunity for members to have a voice in the destiny of the CBOT.

'It reinvigorates your exchange, that has a 160-year history of being reinvented,' he said. 'We have complete confidence in our ability to execute and integrate our complementary businesses,' he said before answering members' questions about his intentions.

Hours earlier, top CBOT executives defended the proposal to pair the two Chicago exchanges. Chairman Charles Carey and CEO Bernard Dan said in a letter distributed to Board of Trade members that the Merc deal remains superior even though its dollar value is less.

'The boards of CBOT Holdings and CBOT strongly believe that this combination of CME and CBOT provides a great opportunity for creating both short- and long-term value for our shareholders and members,' they said.

Carey and Dan said the Merc's proposal, which CBOT already has endorsed, offers the 'huge plus' of quickly and efficiently integrating the two companies.

'As soon as this transaction closes, we will be able to immediately jump-start the processes that we have been working on together for the past seven months,' they said. 'We believe that the hard work that we have done with CME will make this merger a success from day one.'

Additionally, they contended that member rights are better protected in the proposed CME transaction, despite the agreement on exercise rights ICE announced Wednesday in which the Atlanta exchange would give CBOT traders an extra $500,000 in cash each if its proposal is accepted.

Under that arrangement, ICE would pay that sum in exchange for their exercise rights to the Chicago Board Options Exchange, settling a long-standing legal dispute between CBOT and the options exchange.

Carey and Dan said the ICE proposal provides little protection from adverse rule changes and gives members less-than-full rights to trade all new products at CBOT or the Merc. They said they are pursuing the legal dispute in court and seeking equal treatment for qualifying CBOT members.

Sprecher contended later that his proposal faces significantly less regulatory risk, despite what the BOT executives maintain. He said ICE is a faster-growing company with a successful track record of integration.

Shares in ICE fell $3.77, or 2.5 percent, to $144.94 in Thursday trading, while CBOT declined $1.01 to $196.61. CME's stock climbed $3.15 to $531.