CME Group is looking to sweeten its proposed cash and stock offer to acquire the New York Mercantile Exchange because recent declines in the share prices of both have shaved more than $1 billion off the original value of the deal, the Financial Times reported Monday.
The FT, citing a source familiar with the negotiations, said CME could improve the stock and cash ratio of the deal to bring it back in line with its initial value of roughly $11.1 billion.
CME and NYMEX announced January 28 they were in preliminary talks that could lead to the CME's acquisition of NYMEX. Under terms unveiled at the time, CME would pay $36 in cash and 0.1323 of a share of CME Group common stock for each share of NYMEX. Based on the January 25 closing price of CME,it would pay the equivalent of $119.22 for each share of NYMEX Holdings, which with its 92.871 million shares outstanding, puts the total value of the deal at roughly $11.1 billion.
But the share prices of the two exchanges slumped earlier this month after the US Department of Justice spoke in favor of separating futures exchanges and their clearing houses, noting there would be "significant benefits" to
splitting them up.
Using the same stock and cash formula unveiled in January, CME would now pay the equivalent of $105.47 for each NYMEX share--down $13.75 from the initial value. That puts the the overall deal at about $9.8 billion.
A 30-day exclusive negotiating period between CME and NYMEX expires this
week.
A spokesman for CME Group declined to comment on the FT report. A NYMEX
spokeswoman could not be reached for comment.
The FT, citing a source familiar with the negotiations, said CME could improve the stock and cash ratio of the deal to bring it back in line with its initial value of roughly $11.1 billion.
CME and NYMEX announced January 28 they were in preliminary talks that could lead to the CME's acquisition of NYMEX. Under terms unveiled at the time, CME would pay $36 in cash and 0.1323 of a share of CME Group common stock for each share of NYMEX. Based on the January 25 closing price of CME,it would pay the equivalent of $119.22 for each share of NYMEX Holdings, which with its 92.871 million shares outstanding, puts the total value of the deal at roughly $11.1 billion.
But the share prices of the two exchanges slumped earlier this month after the US Department of Justice spoke in favor of separating futures exchanges and their clearing houses, noting there would be "significant benefits" to
splitting them up.
Using the same stock and cash formula unveiled in January, CME would now pay the equivalent of $105.47 for each NYMEX share--down $13.75 from the initial value. That puts the the overall deal at about $9.8 billion.
A 30-day exclusive negotiating period between CME and NYMEX expires this
week.
A spokesman for CME Group declined to comment on the FT report. A NYMEX
spokeswoman could not be reached for comment.
