Battling back from a barrage of criticism from its Chicago Mercantile Exchange (CME) rival, IntercontinentalExchange, Inc.(ICE) Monday announced two additional big bank advisors to its bid for the Chicago Board of Trade (CBOT) exchange and launched a conference call to proclaim the virtues of a CBOT merger with the small but fast-growing ICE.
The two new advisors joining Morgan Stanley are UBS Investment Bank and Société Générale Corporate & Investment Banking.
“UBS and Société Générale are two of the leading players in the global commodities business and we are very pleased to have them on our team,” said Jeffrey C. Sprecher, ICE chairman and CEO. “Their involvement indicates their support for our pro-competitive proposal to combine ICE and CBOT and the many benefits it would bring to participants throughout the global derivatives marketplace.”
UBS, Société Générale and Morgan Stanley are all ranked in the top 10 for Futures Commission Merchant (FCM) operations, based on U.S. customer segregated funds.
In his conference call Sprecher described the rapid rise of ICE, its success in integrating other merger partners, its technical abilities, including the ability to rapidly expand its clearing operations, and the synergies of an ICE/CBOT combination. ICE’s all-stock offer of 1.42 ICE shares for each share of CBOT was valued at about $9 billion initially (see Daily GPI, March 16). Since then ICE’s stock has dropped from about $128/share to about $120/share Monday, lessening the value of the offer and leading Sprecher to say the company would consider adding “substantial” cash to the deal.
Sprecher also said he believed that CBOT members would be “materially disadvantaged” in a merger with CME, which would “effectively dissolve CBOT,” and mentioned the Justice Department investigation into potential conflicts in the proposed CME-CBOT combination of two Chicago-based exchanges.
He said he was ready to begin a dialogue with CBOT members as soon as possible.
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