CME
Group Inc. (NYSE: CME) announced plans today for a share buyback and special dividend
that effectively sweetens its bid for Nymex Holdings Inc. (NYSE: NMX). The world's
largest futures exachange said it would institute a $1.1 billion buyback plan over
the next 18 months and pay a $5 per share cash dividend if its bid for the energy
and metals exchange succeeds.
The proposed acquisition hit some snags due to a slump in CME Group's share price,
which has lowered the takeover price by as much as $3 billion to just $8 billion.
The buyback and dividend tactic worked wonders the last time CME Group used it during
its acquisition of rival Chicago Board of Trade last year. After all, they are great
for shareholders!
The original deal calls for Nymex shareholders to receive $36 and 0.1323 shares of
CME for each NMX share. The proposed dividend would raise the purchase price for Nymex
stock to $97.11 per share, which represents a $9.27 billion overall valuation. However,
some investors are still concerned that the deal may fall through.
Many believe that the CME Group may be forced to tweak the cash portion of the deal
slightly higher in order to sway the remaining opposition. This is the cause behind
the recent rally in the differential between Nymex and CME Group shares that arbitrageurs
have been trading for some time now.
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NASDAQ OMX Group, Inc. (NDAQ)
NYMEX Holdings, Inc. (NMX)
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IntercontinentalExchange, Inc. (ICE)
MarketAxess Holdings Inc. (MKTX)
IDACORP, Inc. (IDA)
Arbinet-thexchange, Inc. (ARBX)
