Merc attacks rival??™s offer to acquire Board of Trade

CHICAGO The Chicago Mercantile Exchange on Tuesday called a rival bid for the crosstown Board of Trade significantly inferior to its own, taking the offensive to preserve its acquisition plans without raising its own offer.

Chicago Mercantile Exchange Holdings Inc. said it will defend its planned acquisition Thursday in a meeting with Board of Trade members and shareholders of CBOT Holdings Inc., its parent company, who are scheduled to vote April 4 on whether to approve it.

Merc executives did not immediately address the possibility of a sweetened bid to ensure it wins out over the offer made last week by the all-electronic IntercontinentalExchange Inc. The ICE bid was said to be worth $9.9 billion when it was announced, or more than $1 billion more than the Mercs $8 billion-plus offer, although both totals fluctuate based on daily stock prices.

Investors and Wall Street analysts have widely anticipated an increased proposal by Merc the worlds largest futures and options exchange and possibly a bidding war over the Board of Trade.

In our view, the ICE proposal is significantly inferior to the CME/CBOT merger financially, strategically and operationally, CME Chief Executive Craig Donohue said.

Our transaction provides more value to our respective customers through reduced expenses and greater trading opportunities, and positions the combined CME/CBOT company as the leading exchange in global financial markets. We believe this will ultimately translate into more value for CBOT shareholders, he said.

The statement came a day after the Board of Trade said its board of directors has authorized talks with Atlanta-based ICE, a seven-year-old exchange that is a relative upstart compared with the venerable Chicago exchanges, with histories dating to the 1800s.

It produced an almost immediate retort from ICEs chairman and chief executive, Jeffrey Sprecher, who said CMEs rhetoric will not fool CBOT shareholders.

Sprecher says the ICE bid is clearly superior and stands a better chance of passing muster with regulators than a Merc-CBOT combination, which would control 85 percent of the U.S. market for exchange-traded futures contracts. Regulators are said to be concerned about the effect of such a behemoth exchange on prices.

Shareholders will have the final say. Merc officials said they will explain their views in detail on Thursday at a meeting with analysts followed by one with members and shareholders.

CME shares rose $2.20 to close at $532.45 on the New York Stock Exchange. CBOT shares rose $1.19 to $197.90 after three straight days of record closing highs, while ICE climbed $1.90 to $129.89 on the NYSE.

Source: [url=http://www.fortwayne.com/mld/journalgazette/business/16945033.htm]Fort Wayne Journal Gazette[/url]