The world's biggest financial exchange was born on Monday when shareholders of the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME) voted to merge.
The friendly CME bid -- worth an estimated US$11 billion -- was accepted by an overwhelming majority of CBOT shareholders, preliminary results showed.
"It's the biggest trade in the history of Chicago and it's one of the few trades where both sides win," CBOT chairman Charles Carey said.
PHOTO: AP
CBOT shareholders had been hit with a fierce takeover campaign by IntercontinentalExchange (ICE), which operates the New York Board of Trade and the London-based International Petroleum Exchange.
ICE failed to boost its offer after CME sweetened its bid for the third time on Friday, allowing CBOT shareholders to own some 36 percent of the combined company, up from 35 percent in the prior agreement.
That extra boost was enough to convince many of the remaining holdouts at the CBOT, said Jeremy Israelov, a wheat trader who has been a member for 17 years.
"It went from a losing proposition to a winning proposition," he said ahead of the vote on Monday.
The transaction is expected to be completed in the coming days, but it will be 12 to 18 months before the two exchanges are fully integrated, officials said.
The CME will move into the CBOT's art deco landmark in the second quarter of next year. It will be a busy building: average daily volume for the two exchanges was nearly 12 million trades a day last month.
While the CME has twice the volume, its leaders said on Monday that the CBOT's brand is a valuable one and promised to maintain it.
"Nobody's going to tear the name off the Chicago Board of Trade [building]," CME chairman Terry Duffy said.
The combined company will be called CME Group Inc, a CME/Chicago Board of Trade Company.
Its market value will be some US$30 billion, or about 50 percent bigger than its closest rival, NYSE Euronext, formed by the merger of the New York Stock Exchange and the pan-European bourse.
The Chicago market will be "the world's largest and most diverse exchange, providing products in all major benchmark asset classes," the companies said.
In a statement after the vote on Monday, ICE chairman Jeffrey Sprecher said his company would pursue other avenues.
"For CBOT stockholders, ICE's involvement has created nearly US$3 billion in additional value through our willingness to recognize the true worth of your company," he said.
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