Strategic combination creates leading global exchange with
benchmark products in every major asset class CHICAGO and NEW YORK,
March 17 /PRNewswire-FirstCall/ -- CME Group Inc.
(NYSE:CMENASDAQ:CME) and NYMEX Holdings, Inc. (NYSE:NMX) today
announced they have signed a definitive agreement under which CME
Group will acquire NYMEX Holdings (NYMEX), the parent company of
New York Mercantile Exchange, Inc. on the terms previously
announced. The transaction joins the complementary product
offerings of two of the industry's leading and most dynamic
exchanges. This combination will further diversify the company's
revenues, with products in every major asset class. It also will
better position the company to compete globally with other cash,
over-the-counter (OTC) and regulated markets and participate in the
fast-growing global energy market. The transaction also is expected
to deliver significant customer benefits through clearing capital
efficiencies related to equity holding requirements, portfolio
margining and security deposits for joint clearing members.
Additional benefits will include harmonized trading and
administrative technology systems, building on the existing CME
Group/NYMEX exclusive electronic trading agreement. Under the terms
of the definitive agreement, shareholders of NYMEX will receive
total consideration equal to 0.1323 shares of CME Group Class A
common stock and $36.00 in cash for each share of NYMEX common
stock outstanding, or an aggregate of approximately 12.5 million
shares of CME Group Class A common stock and cash of $3.4 billion.
NYMEX shareholders will hold approximately 18.6% of the combined
company on a pro forma basis. Shareholders of NYMEX can elect to
receive either CME Group Class A common stock or cash for each
share of NYMEX common stock. The exact amount of the cash and stock
consideration to be received by each NYMEX shareholder will be
determined by proration in the event that total cash elections are
either greater than or less than the mandatory cash component of
approximately $3.4 billion. CME Group may choose to increase the
cash amount if NYMEX shareholders elect to receive more than $3.4
billion in cash, under certain circumstances. The strategic
combination is expected to create substantial value for
shareholders through the realization of approximately $60 million
in cost synergies and additional compelling growth opportunities.
As part of the transaction, NYMEX is required to offer to purchase
the 816 outstanding NYMEX Class A memberships for consideration not
to exceed $500 million in the aggregate, or approximately $612,000
per membership. The closing of the transaction will be conditioned
on, among other things, at least 75 percent of the memberships
being repurchased. The combined company will provide global market
participants access to the leading financial and agricultural
exchange and the leading energy and metals exchange in a regulated,
transparent marketplace distributed around the world through the
enhanced speed and capacity of the CME Globex(R) platform. NYMEX
customers will benefit from a single point of contact from trade
matching through clearing. CME Group will continue to offer
multiple venues for execution, including trading floors in Chicago
and New York, clearing on the NYMEX ClearPort(R) platform, as well
as electronic trading on CME Globex, which is available to
customers worldwide virtually 24 hours each trading day. The
combined company will continue to operate a trading floor in New
York City as long as both revenue and profitability thresholds are
achieved going forward. "This strategic combination with NYMEX, the
premier exchange in energy and metals derivatives trading,
continues both of our companies' traditions of finding innovative
ways to create value for our customers and shareholders," said CME
Group Executive Chairman Terry Duffy. "This agreement builds on our
existing trading technology agreement announced in April 2006 that
has allowed customers around the world to benefit from access to
NYMEX's benchmark energy and metals products. Since coming onto the
CME Globex platform, average daily volume of NYMEX products on CME
Globex has increased to nearly one million contracts. Through this
combination, we will be better able to generate synergies between
our exchanges to provide increased efficiencies and new trading
opportunities for customers around the world and create new
long-term value for our shareholders. We greatly appreciate the
statements of support made this morning by our Congressional
leaders, including Senators Durbin and Schumer, as we continue our
commitment to both New York and Chicago through this transaction."
"NYMEX shareholders and customers have benefited greatly from our
existing technology services agreement with CME Group, and this
transaction allows us to take the business and our growth to a much
higher level," said NYMEX Chairman Richard Schaeffer. "CME Group
has excellent potential for strong future growth and our careful
review of the various options available to NYMEX for enhancing
long-term shareholder value concluded that this transaction is the
best path for NYMEX customers and shareholders alike. We are
excited by the unique opportunities this combination creates for us
to continue to build our business internationally, further improve
cost efficiencies and trading opportunities, and grow shareholder
value." "CME Group is committed to providing market users around
the world with the broadest array of benchmark products, deep pools
of liquidity, and the choice of trading on our electronic platform
or trading floors," said CME Group Chief Executive Officer Craig
Donohue. "Because energy products complement our diverse suite of
product offerings, this acquisition creates immediate and long-term
value for our combined company, our customers and our shareholders.
We have a proven track record of completing large-scale
integrations on schedule and according to plan, with a focus on
ensuring a seamless experience for users of our markets. In
addition to the expected operational cost efficiencies and revenue
enhancements, the combined company will be able to further
distribute NYMEX benchmark products and expand OTC energy trading
opportunities, helping to ensure that CME Group can sustain its
strong, globally competitive position in the future." "Both NYMEX
and CME Group have a proven track record of bringing new and
innovative risk management products to the marketplace, and we are
excited about the potential to create a viable, long-term trading
environment for our combined products," said NYMEX President and
Chief Executive Officer James E. Newsome. "In addition, the
combination will create new development opportunities in new
markets, for new products and for new customers. As a result of
NYMEX combining with CME Group, market participants will continue
to rely on the price transparency and liquidity they have grown to
expect from both exchanges while utilizing the CME Globex
electronic trading platform. NYMEX has always been proud of giving
its customers the ability to choose where and how they trade by
offering a diverse set of risk management tools in multiple venues.
This transaction will expand those options tremendously." Upon
completion of the transaction, Duffy will remain Executive Chairman
of CME Group and Donohue will remain Chief Executive Officer. The
Board of Directors of CME Group will add three directors from
NYMEX. Strategic Benefits of the Transaction -- Financially
Attractive: CME Group and NYMEX expect the transaction to become
accretive to earnings on a GAAP basis within 12 to 18 months after
the close. -- Synergy Opportunities: Anticipated pre-tax cost
savings of approximately $60 million annually, driven primarily by
technology and administrative cost reductions. -- Operational
Efficiencies: Expected customer benefits derived from clearing
efficiencies, harmonized trading and administrative technology
systems. -- Strategic Position: Affords CME Group the opportunity
to provide a regulated, transparent exchange for global energy and
metals market participants, thereby offering an alternative to
opaque market models that exist in the cash and OTC markets today.
-- Global Growth: The combination will also significantly expand
CME Group's presence where energy and metals products are central
to risk management strategies, particularly in the Middle East and
Asia. -- Worldwide Partnerships: Efforts to expand NYMEX's energy
presence globally through its existing relationships with the Dubai
Mercantile Exchange, the Norwegian derivatives exchange, Imarex,
the recently announced Green Exchange and the initiative with LCH
remain unchanged under the terms of the agreement and will
complement CME Group's existing partnerships with BM&F and
Korea Exchange. The transaction is subject to approvals of
regulators, shareholders of both companies and NYMEX members, as
well as the satisfaction of customary closing conditions. The
boards of directors of CME Group and NYMEX have each unanimously
approved the transaction and each director on the boards of NYMEX
and CME Group has indicated an intent to vote in favor of the
merger. The closing of the transaction will be conditioned on,
among other things, the regulatory, shareholder and membership
approvals described above, at least 75 percent of the Class A
memberships in NYMEX being repurchased by NYMEX and approval of
amendments to the NYMEX certificate of incorporation and bylaws by
the NYMEX members. Following the merger, trading privileges will be
provided through a new trading permit program. Subject to necessary
consents and approvals, the companies expect to close the merger in
the fourth quarter of 2008. Lehman Brothers, Goldman Sachs and
William Blair are acting as financial advisors to CME Group, and
Skadden, Arps, Slate, Meagher & Flom LLP is acting as CME
Group's legal advisor. JP Morgan and Merrill Lynch are acting as
financial advisors to NYMEX, Sandler O'Neill is acting as special
financial adviser to NYMEX in connection with NYMEX Class A
memberships, and Weil, Gotshal & Manges LLP is acting as
NYMEX's legal advisor. Conference Call There will be an analyst and
investor conference call conducted by management teams of both CME
Group and NYMEX to discuss the transaction, today at 8:30 a.m.
Eastern time (7:30 a.m., Central). A live audio Webcast of the call
will be available on the Investor Relations section of CME Group's
Web site at http://www.cmegroup.com/ and on NYMEX's Web site at
http://www.nymex.com/. An archived recording will be available for
up to two months after the call. A call-in number is also
available: domestic 866.277.1181, international 617.597.5358;
passcode is 30790866. About CME Group CME Group
(http://www.cmegroup.com/) is the world's largest and most diverse
exchange. Formed by the 2007 merger of the Chicago Mercantile
Exchange (CME) and the Chicago Board of Trade (CBOT), CME Group
serves the risk management needs of customers around the globe. As
an international marketplace, CME Group brings buyers and sellers
together on the CME Globex electronic trading platform and on its
trading floors. CME Group offers the widest range of benchmark
products available across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, agricultural commodities, and alternative
investment products such as weather and real estate. CME Group is
traded on the New York Stock Exchange and NASDAQ under the symbol
"CME." About NYMEX Holdings, Inc. NYMEX Holdings, Inc. (NYSE:NMX)
is the parent company of the New York Mercantile Exchange, Inc.,
the world's largest physical commodities exchange, offering futures
and options trading in energy, metals and other contracts and
clearing services for more than 400 off-exchange contracts. Through
a hybrid model of open outcry floor trading and electronic trading
on the CME Globex(R) electronic platform, as well as clearing
off-exchange instruments through NYMEX ClearPort(R) Clearing, NYMEX
offers crude oil, petroleum products, natural gas, coal,
electricity, gold, silver, copper, aluminum, platinum group metals,
emissions, and soft commodities contracts for trading and clearing
virtually 24 hours each day. Further information about NYMEX
Holdings, Inc. and the New York Mercantile Exchange, Inc. is
available on the NYMEX website at http://www.nymex.com/. Additional
Information Forward Looking Statements: This press release may
contain forward-looking information regarding CME Group Inc. and
NYMEX Holdings, Inc. and the combined company after the completion
of the merger that are 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 Group and NYMEX Holdings, 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 Group's and
NYMEX Holdings' management which are subject to risks and
uncertainties which could cause actual outcomes and result 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, antitrust, regulatory and other approvals
on the proposed terms and schedule; the proposed transaction may
not be consummated on the proposed terms and schedule; uncertainty
of the expected financial performance of CME Group following
completion of the proposed transaction; CME Group may not be able
to achieve the expected cost savings, synergies and other strategic
benefits as a result of the proposed transaction or may take longer
to achieve the cost savings, synergies and benefits than expected;
the integration of NYMEX Holdings with CME Group'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 Item 1A of CME Group's Annual Report on Form 10-K for
the fiscal year ended December 31, 2007 and Item 1A of NYMEX's
Annual Report on Form 10-K for the fiscal year ended December 31,
2007. Copies of said 10-Ks are available online at
http://www.sec.gov/ or on request from the applicable company. You
should not place undue reliance on forward-looking statements,
which speak only as of the date of this press release. Except for
any obligation to disclose material information under the Federal
securities laws, CME Group and NYMEX Holdings undertake no
obligation to release publicly any revisions to any forward-
looking statements to reflect events or circumstances after the
date of this press release. Important Merger Information In
connection with the proposed transaction, the parties intend to
file relevant materials with the Securities and Exchange Commission
("SEC"), including a joint proxy statement/prospectus. Such
documents, however, are not currently available. Investors are
urged to read the joint proxy statement/prospectus regarding the
proposed transaction when it becomes available, because it will
contain important information. Investors will be able to obtain a
free copy of the joint proxy statement/prospectus, as well as other
filings containing information about CME Group and NYMEX Holdings
without charge, at the SEC's website (http://www.sec.gov/) once
such documents are filed with the SEC. Copies of the joint proxy
statement/prospectus can also be obtained, without charge, once
they are filed with the SEC, by directing a request to CME Group
Inc., Attention: Shareholder Relations, 20 S. Wacker Drive,
Chicago, Illinois 60606 , (312) 930-1000 or NYMEX Holdings, Inc.,
Attention: Investor Relations, at One North End Avenue, World
Financial Center, New York, New York 10282, (212) 299-2000. CME
Group and NYMEX Holdings and their respective directors, executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from CME
Group and NYMEX Holdings shareholders in respect of the proposed
transaction. Information regarding CME Group and NYMEX Holdings'
directors and executive officers is available in their respective
proxy statements for their 2007 annual meeting of stockholders.
Additional information regarding the interests of such potential
participants will be included in the joint proxy
statement/prospectus and the other relevant documents filed with
the SEC when they become available. This document shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. CME-G DATASOURCE: CME Group Inc. CONTACT: media, Anita
Liskey, +1-312-466-4613, or Allan Schoenberg, +1-312-930-8189, , or
investors, John Peschier, +1-312-930-8491, all of the CME Group; or
media, Anu Ahluwalia, +1-212-299-2439, , or investors, Keil Decker,
+1-212-299-2209, all of NYMEX Web site: http://www.cme.com/
Copyright