IPE Board Turn Its Back on NYMEX
The board of directors for the London-based International
Petroleum Exchange urged its members Wednesday to accept a buy-out
offer from five outside investors rather than accept a proposed
merger bid from the New York Mercantile Exchange. The 475 members
of the IPE will vote on the sale at an extraordinary general
meeting held on July 30. The board threatened to resign if the
outside investor sale failed.
The group of investors is composed of British Gas plc.,
Distrigas, Enron, Nord Pool and OM Group. Through combined efforts,
these five companies have offered the IPE $25 million pounds (U.S.
$38.99 million) for 70% of the exchange. The companies made the
offer in an open tender which closed in May. A simple majority of
the membership needs to vote in favor of the sale for the outside
investors to be successful.
The board support for the sale is a setback for NYMEX, which has
been in merger discussions with the IPE since late last year (See
Daily GPI, Nov. 23, 1998). Earlier this year, the U.S. exchange
tendered an offer that was rejected by the IPE. Last week, NYMEX
increased the valuation of its offer to $19.6 million pounds for
55% of IPE, in reaction to the bid from the five investors. The
U.S. exchange said it increased its offer to match the value of the
outside investor offer. Under the NYMEX proposal, the IPE would
maintain a 30% interest.
"NYMEX made the IPE an offer that was identical financially to
the outside investor proposal and, in our opinion, was far superior
from a qualitative and strategic perspective," NYMEX said in a
statement. It would not respond to the IPE board's comments. The
NYMEX and the IPE account for almost all global energy futures
trading. The NYMEX is the bigger of the two exchanges. Both the
NYMEX and the IPE trade futures on crude oil, petroleum products
and natural gas.
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