The New York Mercantile Exchange (Nymex) said Friday that the board of directors of Nymex Holdings has decided not to “currently” pursue a transaction with Parthenon Capital LLC, which sought to buy a controlling interest in the exchange.

In April, Nymex received an unsolicited offer from Parthenon to buy a 60% controlling interest in the exchange for up to $2 million per seat, or about $980 million for 490 seats on the exchange. Parthenon, a private equity investment firm with about $1.1 billion under management, said the offer included cash and other undisclosed considerations. It represented a 30% premium to the most recent purchase of a Nymex seat.

Parthenon’s proposal stated that the transaction would include, among other things, support for and preservation of open outcry trading. It was the first time the exchange received an offer to buy a majority stake (see NGI, April 12).

Rumors surfaced that several members of the board believed the deal undervalued the exchange. The board also may have been suspicious of former Nymex President J. Robert “Bo” Collins’ support for the deal because of a clause in his contract that allegedly offered him 2% of the value of any merger or acquisition deal. In June, Collins turned down a new contract with the exchange, possibly in response to the rumored disagreement with the board over whether to accept the Parthenon offer. Nymex has since hired former CFTC Chairman James Newsome as its new president (see NGI, June 7).

After due diligence and preliminary discussions about the structure of a potential transaction, the Nymex board apparently made its final decision last Wednesday night to reject the offer. However, its decision may have left open the possibility of revisiting an offer at some later date.

Nymex spokeswoman Nachamah Jacobovits said one of the main reasons Nymex declined the Parthenon offer actually had “nothing to do with Parthenon, but had more to do with the fact that we had several management changes over the last few months and really would like to give our current the management the opportunity to work with our investment banker, who is also relatively new, and really fully explore what our alternatives are, both from a benefit and impact standpoint, before determining if we want to pursue any alternative. Unfortunately the timing here was bad.”

Jacobovits said the Parthenon offer also changed from when it was first announced, but she declined to provide details. “It just didn’t make sense because it was one proposal on the table without us having the full opportunity to review what would be in our best interests and what would make sense for us to pursue.”

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