CME raises bid for CBOT after lawsuit threat

The Chicago Mercantile Exchange (CME) sweetened its bid for its rival exchange, the Chicago Board of Trade (CBOT), yesterday.

Although the CME received approval from antitrust regulators for the takeover earlier this month, it still faces the threat of a hostile rival bid from the Atlanta-based Intercontinental Exchange (Ice). The revised CME bid includes a one-off dividend of $9.14 per share, and also offers seatholders in the Chicago Board Options Exchange (CBOE) $250,000 compensation for the potential loss of their seats after the takeover. The deal would also create a five-person committee, including three CBOT directors, with veto power over any rule or fee changes for the next five years.

However, CME's offer, favoured by CBOT management, is still inferior to Ice's in overall financial terms; Ice offered $500,000 compensation to CBOE seatholders, and the revised CME bid values CBOT at a total of $10.64 billion in cash and shares, while Ice is offering $11.42 billion in shares. CME's shares fell slightly after the announcement.

CBOT also said the improvement had allowed it to settle a lawsuit brought in March by shareholders led by the Louisiana Municipal Employees' Retirement System, who claimed the merger threatened shareholder value.