Ice announces bid to merge with CBOT

The Atlanta-based Intercontinental Exchange (Ice) is bidding to merge with the Chicago Board of Trade (CBOT), in an all-share deal valuing the Chicago exchange at $9.9 billion.

The Ice proposal would see the merged company, based in Chicago, 51.5%-owned by former CBOT shareholders. Ice predicted the merger would produce up to $240 million in cost savings and improved revenues, starting 18 months after the merger closes in the third quarter of this year. The boards of the two exchanges would also merge, with Ice chief executive Jeffrey Sprecher taking over as chief executive of the merged company.

CBOT’s products would be cleared through Ice after its current agreement with CME ends in January 2009, the exchange said. Ice said it sees no significant antitrust issues in its proposal: Ice deals mainly in energy derivatives, while CBOT handles commodity and fixed income. The CME-CBOT merger has raised concerns that it could damage the competitiveness of the US derivatives industry.

CME and CBOT, who announced their merger in October 2006, have not commented on Ice’s bid.