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IPE Turns to Outside Investors, Including Enron, British Gas

IPE Turns to Outside Investors, Including Enron, British Gas

The board of directors for the London-based International Petroleum Exchange urged its members last Wednesday to accept a buy-out offer from five outside investors including British Gas, Distrigas, Enron, Nord Pool and OM Group, 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.

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 NGI, 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. 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. The NYMEX and the IPE account for almost all global energy futures trading with NYMEX being the larger of the two. Both trade futures on crude oil, petroleum products and natural gas.

John Norris

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