The consolidation of global exchanges was thrown into flux yesterday as the Intercontinental Exchange of Atlanta (ICE) launching an unsolicited $9.9 billion offer for the Chicago Board of Trade (CBOT). This could break up the CBOT's agreed merger with the Chicago Mercantile Exchange (CME).
The proposed bid - which was 10.5 per cent higher than the CME's indicative offer - was timed to coincide with a major futures industry conference in Boca Raton, Florida, and led to immediate predictions of a bidding war for CBOT.
Analysts said if the combination of the two Chicago exchanges was derailed, Deutsche Bourse might be tempted to seek a deal with the CME, and the NYSE Group could become more likely to bid for the Chicago Board Options Exchange, the biggest US options exchange.
"People are walking around stunned," said Gary DeWaal, general counsel at broker Fimat and Florida conference delegate.
"This is a tremendous wild card and opens up the process dramatically. It may alter the whole chemistry of the landscape."
ICE officials made it clear they were seeking to take advantage of concerns on Wall Street that an enlarged CME would wield excessive power in the growing global derivatives market.
The CME-CBOT deal is being vetted by the US justice department on anti-trust grounds.
Jeff Sprecher, ICE founder and chief executive, said: "We believe we are in the best position with the regulators."
Under the ICE proposal, CBOT shareholders would retain a narrow majority of shares in the combined company - which would retain the CBOT name and Chicago headquarters.
Mr Sprecher said the ICE's all-stock proposal could introduce a cash element to sweeten its deal.
The business would combine the board of trade's business in financial and agricultural commodity futures with the ICE focus on energy, soft commodities and OTC transactions.
The CME insisted it would proceed with the CBOT purchase but has become concerned about the opposition marshalled by the banks ahead of shareholder and member votes on April 4th.
Executives of the Chicago exchanges have defended the near-monopoly it would have on exchange-traded futures in the US because of the globalising nature of the derivatives business.
Executives maintain opponents are motivated by the potential loss of profits rather than any "public good".
CBOT shares rose as much as 15 per cent to a record $192.42, above the $187.34 proposal from the ICE. ICE, which floated in November 2005, fell 3.7 per cent to $127.13, and CME fell 3.8 per cent to $542.63.
