The board of directors for the London-based InternationalPetroleum Exchange urged its members Wednesday to accept a buy-outoffer from five outside investors rather than accept a proposedmerger bid from the New York Mercantile Exchange. The 475 membersof the IPE will vote on the sale at an extraordinary generalmeeting held on July 30. The board threatened to resign if theoutside 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 theoffer in an open tender which closed in May. A simple majority ofthe membership needs to vote in favor of the sale for the outsideinvestors to be successful.

The board support for the sale is a setback for NYMEX, which hasbeen in merger discussions with the IPE since late last year (SeeDaily GPI, Nov. 23, 1998). Earlier this year, the U.S. exchangetendered an offer that was rejected by the IPE. Last week, NYMEXincreased the valuation of its offer to $19.6 million pounds for55% of IPE, in reaction to the bid from the five investors. TheU.S. exchange said it increased its offer to match the value of theoutside investor offer. Under the NYMEX proposal, the IPE wouldmaintain a 30% interest.

“NYMEX made the IPE an offer that was identical financially tothe outside investor proposal and, in our opinion, was far superiorfrom a qualitative and strategic perspective,” NYMEX said in astatement. It would not respond to the IPE board’s comments. TheNYMEX and the IPE account for almost all global energy futurestrading. The NYMEX is the bigger of the two exchanges. Both theNYMEX and the IPE trade futures on crude oil, petroleum productsand natural gas.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.