Chicago Mercantile Exchange, CBOT merger expected to close within days

By Lisa Kerner

Charlotte, N.C., July 9 - Shareholders of both Chicago Mercantile Exchange Holdings Inc. and CBOT Holdings, Inc. approved the proposed merger of the two companies, based on preliminary results from special meetings held separately on Monday.

"We are pleased that shareholders of both companies have demonstrated support for this groundbreaking merger," Chicago Mercantile Exchange executive chairman Terry Duffy said in a company news release. "The combined company will transform the global derivatives industry and create efficiencies for customers and members while delivering significant benefits to our shareholders."

Chicago Mercantile Exchange said it has had integration teams working to prepare for the companies' combination and expects to "hit the ground running" once the transaction closes in the next several days.

The combined company will be called CME Group Inc., a CME/Chicago Board of Trade Company.

Under an amended Oct. 17, 2006 agreement, CBOT shareholders will receive 0.375 of a share, up from 0.35 of a share, of Chicago Mercantile class A common stock for each share of CBOT Holdings class A common stock. In addition, CBOT Holdings representatives will fill 10 of the 30 seats on the combined company's board of directors.

Chicago Mercantile's revised terms give CBOT shareholders a one-time cash dividend of $9.14 per share, or a total of $485 million. As previously reported, eligible holders of Chicago Board Options Exchange exercise right privileges may also choose to continue as a class member in the CBOE lawsuit or sell each exercise right privilege to the company for $250,000.

In addition, Chicago Mercantile remains obligated to make a $3.5 billion cash tender offer at $560 per share shortly following the closing of the merger.

On June 14, CBOT said that IntercontinentalExchange, Inc.'s proposal was not superior to a revised Chicago Mercantile merger agreement.

CBOT Holdings operates the Chicago Board of Trade, a Chicago derivatives trading exchange. Chicago Mercantile Exchange is the first publicly traded U.S. financial exchange.

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