With the initial 30-day negotiating period expired, CME Group Inc., owner of the Chicago Mercantile Exchange, and Nymex Holdings Inc., owner of the New York Mercantile Exchange, early last week agreed to extend talks regarding CME's potential acquisition of Nymex until March 15.

Announced in late January (see NGI, Feb. 4), the potential $11 billion deal hit a setback in early February after the Department of Justice (DOJ) released its findings that financial futures exchanges that also act as clearinghouses are barriers to competition. In the wake of the DOJ report, the common shares of CME and Nymex took a substantial hit (see NGI, Feb. 11). According to recent media reports, CME is looking to increase its bid, worth about $105/share, to satisfy Nymex shareholders and to prevent competitive bids from arising.

Under the original terms being discussed, shareholders of Nymex would receive $36 in cash and 0.1323 of a share of CME's common stock in exchange for each Nymex share. CME said it expects to maintain trading floors in the New York City metropolitan area.

The potential transaction also contemplates that Nymex will repurchase the 816 New York Mercantile Exchange memberships upon closing of the acquisition for an aggregate purchase price not to exceed $500 million.

The potential transaction remains subject to completion of due diligence, negotiation of terms of a definitive agreement and approvals of the boards of directors of both companies. The companies said there can be no certainty that an agreement will be made and there will be no further comment until an agreement is reached or discussions are terminated.

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