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CBOT gets final OK of sale to Merc

July 10, 2007|From the Associated Press

The Chicago Board of Trade got the final go-ahead from shareholders Monday to join forces with its hometown rival, in an $11.9-billion deal that will end its 159 years of independence but could make the combined all-Chicago company the world's biggest exchange.

The offer by Chicago Mercantile Exchange Holdings Inc. to buy one of the nation's oldest financial institutions won approval at shareholder meetings for both companies after four months of back-and-forth bidding involving upstart IntercontinentalExchange Inc.

The two exchanges said the deal should close within days, creating a firm named CME Group, a CME/Chicago Board of Trade Co.

The vote totals weren't immediately available, but executives said preliminary indications were that the proposal passed easily.

A majority became assured only after the Merc raised its offer a third time Friday to win over CBOT's largest shareholder, Australia-based Caledonia Investments.

Atlanta-based IntercontinentalExchange quietly conceded in the face of the last bid by the Merc, leaving its most recent proposal valued at about $11.7 billion.

Shares of CBOT fell $1.18 to $222.82 on Monday, while Merc shares declined $4.22 to $570.58. The stock-swap deal is valued at about $223 a share to CBOT holders, including a special dividend they will receive.

Executives of the Merc and the Board of Trade, first agreed to combine in October before ICE made a rival offer.

In the end, the tit-for-tat offers added nearly $3 billion in value to the combination.

Pairing the Merc and the Board of Trade would create the world's largest one-stop futures and options exchange for markets including interest rates, wheat and pork bellies, and could make it the world's No. 1 exchange of any kind by market value, outpacing Germany's Deutsche Boerse and the New York Stock Exchange.

The combined company's blockbuster size has prompted concern that it could force up trading prices and claim a monopoly in the booming market for derivative securities -- futures, options and related contracts based on the performance of an underlying financial asset, index or other instrument.

But federal regulators signed off on the proposed combination in June after months of scrutiny.

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