Coming as little more than a formality following a successful vote just days prior, CME Group Inc. said late last month that it has completed its acquisition of Nymex Holdings Inc. CME noted that the combination of the Chicago Mercantile Exchange, the Chicago Board of Trade and now the New York Mercantile Exchange will provide customers with access to all major benchmark asset classes, including interest rates, equity indexes, foreign exchange, energy, agricultural commodities and metals.
The merger creates a company with pro forma 2007 annual revenue of $2.7 billion and average trading volume of approximately 14.2 million contracts per day in the first two quarters of 2008. Customers from more than 85 countries trade CME Group products, primarily electronically. Corporate headquarters of the combined company will remain in Chicago at 20 S. Wacker Drive. CME Group's New York office will be located at the Nymex World Headquarters, One North End Avenue. Nymex Holdings merged into CMEG NY Inc., a wholly owned subsidiary of CME Group.
CME Group has become the king of summer blockbuster mergers. A little more than a year ago, the company, after months of competition, wrangling and revised merger proposals, merged with CBOT Holdings Inc., parent of the 159-year-old Chicago Board of Trade (see NGI, July 16, 2007).
"This is another milestone for CME Group and Nymex in our long and successful histories," said Terry Duffy, chairman of CME Group. "Together, we will continue operating the largest and most diverse derivatives exchange in the world. We are extremely grateful for the support of Nymex shareholders, members and employees. As a united company, we are well positioned for a new phase of growth, innovation and product development that will benefit our customers, shareholders and market users around the world."
Board members of CME Group and Nymex Holdings let out a collective sigh of relief on Aug. 18 after Nymex Holdings' shareholders and its 816 seatholders voted to accept the merger proposal. The member and shareholder vote was anything but a foregone conclusion after news circulating earlier last month alluded to the possibility that the merger might be in jeopardy over tax treatment (see NGI, Aug. 18).
While the deal, which has been recently valued anywhere between $7.9 billion to $8.4 billion, is significant and will include a shake-up of Nymex Holdings' employees, energy traders said they expect little to no impact on the markets. "This merger was basically a done deal in my opinion after Nymex and CME got together in the spring of 2006 on the listing of Nymex contracts on CME's Globex electronic platform," said a New York broker. "The merger is not going to effect the markets one bit I don't think, but it will be felt within the Nymex personnel ranks."
CME Group noted that since the electronic trade agreement (see NGI, May 8, 2006; April 10, 2006), more than one million Nymex contracts trade every day electronically. Overall, the combined open outcry and electronic trading average daily volume, including over-the-counter trades on ClearPort, in July for Nymex was 1.9 million contracts, a 30% increase from 1.4 million contracts per day in July 2007.
CME Group Class A common stock will continue to trade on the NASDAQ under the ticker symbol "CME." Nymex Holdings Inc. common stock is being delisted and will no longer trade on the NYSE. The cash consideration per share of Nymex Holdings common stock is $81.16. The stock consideration will be equal to 0.2378 shares of CME Group Class A common stock for each share of Nymex Holdings common stock. Cash will be paid in lieu of fractional shares. CME Group said preliminary election results indicate that the following elections were made with respect to Nymex Holdings common stock:
"We are very proud to have now completed the consolidation of three of the world's most important and successful derivatives exchanges," said CME Group CEO Craig Donohue. "Our Nymex and Comex acquisition further strengthens CME Group's leading position in global financial markets and provides significant and valuable new growth opportunities for our shareholders, customers and members."
The companies also announced they will begin integrating Nymex business operations in order to achieve approximately $60 million in expected cost synergies. The timetable for integration includes:
After dancing for two months over the details and the structure of the deal, CME and Nymex agreed to the deal in principle in mid-March (see NGI, March 24).
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