Chicago Mercantile Exchange Holdings Inc. Distributes Letter to CBOT Shareholders
June 25 2007 - 2:25PM
PR Newswire (US)
CHICAGO, June 25 /PRNewswire-FirstCall/ -- Chicago Mercantile
Exchange Holdings Inc. (NYSE:CMENASDAQ:CME) today sent the
following letter to shareholders and members of the Chicago Board
of Trade (NYSE:BOT): June 25, 2007 SETTING THE RECORD STRAIGHT ON
THE CME/CBOT MERGER: KNOW THE RISKS OF DEALING WITH ICE Dear CBOT
Shareholders: We are sending this letter to set the record straight
and make sure that all CBOT members and shareholders have the facts
they need to see through the ICE propaganda and understand the
significant risks of their proposal. ICE Offers a Riskier Currency
The current ICE stock price is clearly being driven by a takeover
premium, not by fundamentals. But don't just take our word for it.
The financial community has issued a number of clear warnings about
the risk of ICE's stock: Bank of Montreal: "If it became evident
ICE would win [CBOT], ICE stock would fall substantially." - Mike
Vinciquerra - 6/14/07 Bank of America: "Takeout speculation has
been fueling the stock of late, but we do not believe a takeout is
likely near-term. And while fundamentals have been decent, we are
not sure they are strong enough to support the stock at current
levels." - Chris Allen - 6/14/07 Goldman Sachs: "The biggest risk
to our price target is ICE's potential acquisition of BOT. While
the transaction would have attractive long term accretion, there
are significant hurdles to completing the integration. Further,
should NYMEX attract a larger share of commodity volumes or the
global OTC market slow, earnings could underperform our
expectations." - Daniel Harris - 6/14/07 CIBC: "We believe that
ICE's stock has traded higher since the CME revised offer in
expectation that ICE would not succeed in its bid attempt and would
itself become a takeover target." - Niamh Alexander - 6/13/07
Deutsche Bank: "We believe ICE would have to raise its bid
substantially to overcome CME's operational advantage, with DOJ
approval, and that any new bid could pressure ICE shares to the
downside." - Rob Rutschow - 6/13/07 Credit Suisse: "We believe the
greatest near-term risk to our ICE call relates to its bid to merge
with CBOT. We believe a successful bid would likely lead to
sizeable equity issuance/earnings dilution, higher investment
spending and integration risk while dampening ICE's stand-alone
high growth franchise." - Howard Chen - 6/11/07 ICE Provides a High
Risk Proposition The facts are clear. ICE does not have the
technology or clearing capabilities to manage CBOT business. To
accommodate your trading activity, ICE Clear will have to increase
its clearing capacity by thirteen times NYBOT's average daily
transactions and nineteen times its peak transactions. To handle
your electronic trading volume on its platform, ICE will have to
increase its technology capacity by six times to handle an average
CBOT day and ten times to handle your peak days. Again, you don't
have to take our word for it. Richard Dennis, Independent Trader:
"When it comes to the reliability of trading platforms, the Merc is
a nine, the Board of Trade is a six and ICE is a one," (Richard)
Dennis told the Sun-Times. He said that of all the trading glitches
he encounters, "80 percent of them are due to ICE and the rest
equally to the Board of Trade and the Merc." - Chicago Sun-Times -
6/21/07 Computer Sciences Corporation, an independent technology
consulting firm: "transferring to the ICE platform would create
substantial risk to CBOT and its pools of liquidity." - CSC Report
- May 2007 Keep in mind that ICE is still integrating NYBOT and
NGX; it still needs to integrate ChemConnect; it stills needs to
build new data centers; it still needs to build out NYBOT's
clearing; it still needs to build a London clearing operation; and
it just announced another merger with the Winnipeg Commodity
Exchange. ICE Wants to Minimize the Value of Your CBOE Exercise
Rights Through its proposal with CBOE, ICE has undervalued your
exercise rights. Why have CBOE and ICE drastically undervalued the
ERP, offering to buy out your ERPs for a fraction of their value?
Do you really trust that ICE and CBOE will protect that value? In
contrast, CME and CBOT have now provided a minimum value of
$500,000 per ERP along with the upside to unlock the full value.
Jerry Zordani, CBOT member: "The Merc's latest offer is very
compelling. It preserves the exercise rights." - Chicago Tribune -
6/15/2007 CBOT/CME Merger is the Right Trade for CBOT Members and
Shareholders A CBOT/CME combination delivers real and immediate and
long-term benefits for members, shareholders and customers.
Together, we will be the industry's leading exchange with a
powerful growth strategy. We will offer the most world's most
diverse derivatives product line available via state of the art
trading platform or floor. We will have world-class clearing that
will continue to provide over $1 billion in margin efficiencies. We
will continue our collective tradition of providing preferred
pricing for high volume producers. We have regulatory clearance.
And-we are ready to integrate today and can begin delivering value
immediately. As members and shareholders of CBOT Holdings you are
sophisticated market participants. You understand risk. On July 9,
the choice is clear: vote "YES" on a CBOT/CME combination.
Sincerely, Terry Duffy Craig Donohue Forward-Looking Statements
This document may contain forward-looking information regarding
Chicago Mercantile Exchange Holdings Inc. and CBOT Holdings, Inc.
and the combined company after the completion of the merger that is
intended to be covered by the safe harbor for "forward-looking
statements" provided by the Private Securities Litigation Reform
Act of 1995. These statements include, but are not limited to, the
benefits of the business combination transaction involving CME and
CBOT, including future financial and operating results, the new
company's plans, objectives, expectations and intentions and other
statements that are not historical facts. Such statements are based
on current beliefs, expectations, forecasts and assumptions of CME
and CBOT's management which are subject to risks and uncertainties
which could cause actual outcomes and results to differ materially
from these statements. Other risks and uncertainties relating to
the proposed transaction include, but are not limited to the
satisfaction of conditions to closing; including receipt of
shareholder and member approvals; the proposed transaction may not
be consummated on the proposed terms; uncertainty of the expected
financial performance of CME following completion of the proposed
transaction; CME may not be able to achieve the expected cost
savings, synergies and other strategic benefits as a result of the
proposed transaction; the integration of CBOT with CME's operations
may not be successful or may be materially delayed or may be more
costly or difficult than expected; general industry and market
conditions; general domestic and international economic conditions;
and governmental laws and regulations affecting domestic and
foreign operations. For more information regarding other related
risks, see the Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q of CME and CBOT Holdings for their fiscal years ended
December 31, 2006 and their quarters ended March 31, 2007. Said
documents are available online at http://www.sec.gov/ or on request
from CME or CBOT Holdings, respectively. You should not place undue
reliance on forward-looking statements, which speak only as of the
date of this document. Except for any obligation to disclose
material information under the Federal securities laws, neither CME
nor CBOT Holdings undertakes any obligation to release publicly any
revisions to any forward-looking statements to reflect events or
circumstances after the date of this document. Chicago Mercantile
Exchange Holdings Inc. (NYSE:CMENASDAQ:CME) became the first
publicly traded U.S. financial exchange on Dec. 6, 2002. The
company was added to the Russell 1000(R) Index on July 1, 2003, and
to the S&P 500(R) Index on Aug. 10, 2006. It is the parent
company of Chicago Mercantile Exchange Inc. (http://www.cme.com/),
the world's largest and most diverse financial exchange. As an
international marketplace, CME brings together buyers and sellers
on the CME Globex(R) electronic trading platform and on its trading
floors. CME offers futures and options on futures in these product
areas: interest rates, stock indexes, foreign exchange,
agricultural commodities, energy, and alternative investment
products such as weather, real estate and economic derivatives. CME
is a wholly owned subsidiary of Chicago Mercantile Exchange
Holdings Inc. (NYSE:CMENASDAQ:CME). Further information about
Chicago Mercantile Exchange Holdings Inc. and Chicago Mercantile
Exchange Inc. is available on the CME Web site at
http://www.cme.com/. CME-G DATASOURCE: Chicago Mercantile Exchange
Holdings Inc. CONTACT: Media, Anita Liskey, +1-312-466-4613, or
Pamela Plehn, +1-312-930-3446, , or Investors, John Peschier,
+1-312-930-8491, all of Chicago Mercantile Exchange Holdings Inc.
Web site: http://www.cme.com/
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