Voting to join the old with the new, members of the New York Board of Trade (NYBOT), a 136-year-old floor-based soft commodity exchange, voted overwhelmingly last week to merge with the rapidly expanding IntercontinentalExchange (ICE), one of the newest and fastest growing electronic exchanges, in a $1 billion-plus proposed transaction.
First announced in September (see NGI, Sept. 18), the transaction required NYBOT members vote to approve and adopt the agreement and plan of merger by a two-thirds majority of the votes cast at the special meeting held last Monday. The vote was over the top with 93% voting in favor of the transaction. Corporate Election Services served as the inspector of election and certified the voting results.
“We are one very important step closer to consummating this historic merger,” said ICE CEO Jeffrey C. Sprecher. “We believe this is the strongest indication that the NYBOT membership shares our vision and drive to create the premier global commodity marketplace. Together, we will continue with our commitment to bringing innovation, breadth of product, superior trading and clearing technology and true efficiencies in this dynamic environment. Importantly, we believe the acquisition will provide significant value for our customers and shareholders.”
The vote came just a couple of days after a disgruntled group of NYBOT permit holders filed suit in New York, claiming they were being unfairly left out of the deal (see NGI, Dec. 11). NYBOT responded that permit holders “do not own equity in the exchange, have no right to vote, and have no right to receive any distributions of cash or property, whether upon liquidation, merger or otherwise.”
Following the vote last Monday, NYBOT Chairman Frederick W. Schoenhut, said “Today’s vote is a major event in the history of our exchange, as our members choose to embrace the future. IntercontinentalExchange is the perfect partner for NYBOT, as we both complement each others’ strengths and long-term strategic goals. Together we will offer customers around the globe the ability to trade a broad array of energy, agriculture, and financial derivative and OTC products. We believe our members and our customers will benefit from this merger.”
The merger of the exchanges has been seen as a melding of the old with the new. Upon consummation, NYBOT will become a wholly owned subsidiary of ICE. Major features of the deal are that rapidly growing ICE will get a critically needed and lucrative clearing operation, NYBOT subsidiary New York Clearing Corp., while on the other side, the open outcry exchange will be able to offer electronic trading.
“It is vital to the future of NYBOT that we partner with a dynamic global exchange, and today we are close to seeing this vision become a reality,” said NYBOT CEO C. Harry Falk. “We believe this transaction makes both exchanges more competitive and better equipped to compete globally. The ICE electronic marketplace is an excellent complement to the vibrancy and liquidity of our trading floor, and it will allow us to continue our record growth by offering our products on this dynamic platform.”
NYBOT and ICE said last Monday that they are working toward the launch of electronic trading of NYBOT’s products. NYBOT recently entered into a licensing agreement for the ICE trading platform to offer electronic trading of NYBOT products, for the first time in NYBOT’s history.
The transaction consideration will comprise 10.297 million shares of ICE common stock and $400 million in cash. On word of the successful vote, shares of ICE closed last Monday at $113.21, up 4.73%, or $5.11 over the previous close (Dec. 8). Since the deal was announced back on Sept. 15, ICE’s share price has jumped 75% from a $64.63/share close on Sept. 14. The companies said the transaction is expected to close in early 2007.
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