The world's largest energy market, the New York Mercantile Exchange (NYMEX), is exploring a sale to NYSE Euronext, Deutsche Boerse AG or Chicago Mercantile Exchange Holdings Inc (CME), two people involved in the discussions said.
NYMEX Holdings Inc may be valued at US$155 a share or US$14.3 billion, 11 percent more than Thursday's closing price, said one of the people, who asked not to be identified because the talks are confidential. Top NYMEX executives have met with their counterparts at the three suitors, the people said. NYMEX's board has been informed of the discussions.
NYMEX shares climbed to a record. The stock, dismissed earlier this year by analysts as overvalued, has surged on speculation about a sale. Exchanges worldwide are combining so they can offer customers more products in one place. The growth of electronic trading has broken down barriers among national markets. NYMEX does not have its own electronic futures trading and pays to use the Chicago Mercantile Exchange's system.
"What this does is speak to how size is extremely important to being competitive," said Mark Williams, a finance professor at Boston University. "The derivatives market in general has really exploded in part because trade is becoming more global."
In April, NYSE Group Inc bought Euronext NV for US$14.6 billion and Frankfurt-based Deutsche Boerse agreed to buy New York-based International Securities Exchange for US$2.8 billion.
Deutsche Boerse, NYSE Euronext and NYMEX declined to comment. Chicago Mercantile Exchange said in a statement yesterday that it "is not currently in any discussion with NYMEX regarding a merger or acquisition" and is focused on completing its purchase of the Chicago Board of Trade.
The Board of Trade has agreed to sell to its crosstown rival for US$ 10.2 billion and has spurned an unsolicited US$11.1 billion offer from Intercontinental Exchange Inc. In January, Atlanta-based Intercontinental, the biggest competitor to NYMEX in the trading of benchmark oil and fuel contracts, completed a US$1.8 billion purchase of the New York Board of Trade, which trades sugar and cocoa futures.
Bankers have not yet been hired to advise NYMEX on the possible sale, the people said. The discussions are likely to accelerate after July 9, when shareholders of the Chicago Board of Trade vote on a proposed acquisition by the Chicago Mercantile Exchange, they said.
NYMEX shares gained 13 percent this week. They rose US$2.32 to close at US$142.12 on the New York Stock Exchange.
Deutsche Boerse shares rose 3.31 euros to 88.44 euros in Frankfurt. NYSE Euronext fell US$0.80 to US$80 in New York.
The June 11 decision by US Justice Department antitrust regulators to allow the proposed merger of the Chicago Merc and Chicago Board of Trade helped boost NYMEX shares, Williams said.
If the government doesn't object to combining the Chicago exchanges, which together control more than 95 percent of exchange-traded US futures based on interest rates and stock indexes, it probably won't find fault with a sale of the NYMEX, Williams said.