UPDATE: CBOE Members To Vote On Conversion In Early June

Member-owners of the Chicago Board Options Exchange will vote on its plan to convert to a shareholder-owned structure in early June, according to a notice sent to seatholders late Thursday.

The vote, which requires a majority of all members to approve the conversion, precedes a planned initial public offering for CBOE Holdings Inc., parent of the exchange.

The notice reiterates that a float is slated to happen by the end of June. CBOE is also seeking a second adviser to help price the IPO.

Goldman Sachs & Co. Inc. (GS) has served as CBOE's restructuring adviser since 2005, and will remain the sole global coordinator of the float. It is being paid out of proceeds from the IPO.

Notice of the planned membership vote follows a meeting of seatholders convened Thursday by CBOE Holdings. Exchange executives, who back the flotation, provided more details on the IPO timeline and plans for a special dividend for seatholders.

The CBOE is the largest U.S. options exchange by volume, and its progress toward a long-planned public float is being closely watched after a three-year legal dispute over ownership rights in the company was resolved in December.

The early-June vote is planned as the CBOE structures its demutualization to occur almost simultaneously with its initial public offering.

Conversion from the current member-owned structure will not be complete unless the IPO happens, according to CBOE documents.

The exchange operator also detailed its intention to pay regular quarterly dividends to shareholders following its float, setting out an annual target of approximately 20% to 30% of the prior-year's net income adjusted for unusual items.

Seats at the CBOE, which are bought and sold on an open market that has offered a rough gauge for the company's indicative value, will cease to trade by the date of the IPO's pricing, according to the notice.

The CBOE's resolution of its legal issues in late 2010 revived takeover speculation, with a handful of potential acquirers seen in bigger exchange operators, such as crosstown neighbor CME Group Inc. (CME).

The notice also quoted exchange officials as declining comment on any interest from potential acquirers.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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