CME wins CBOT's heart with increased bid

The CME said on Friday that it will now exchange CBOT shares for 0.35 CME shares each, up 16% from its previous offer of 0.3006. It has also committed to buy back up to $3.5 billion of the merged company's stock at a price of $560 - the original offer included the option for CBOT shareholders to take cash instead of CME shares, up to a total of $3 billion. Lehman Brothers will finance $2.5 billion of the buyback, the exchange said.

The board of CBOT, in return, has reaffirmed its approval of the CME bid and told shareholders that the Ice bid was "not superior to the revised CME transaction". Ice announced its unsolicited bid in March; it said on Friday that it would "evaluate its options". Ice said it would exchange 1.42 Ice shares for each CBOT share.

At current prices, the two bids are similar - Ice's bid equates to shares worth $187.34 for each CBOT share, while CME is offering shares worth $188.85. CME's earlier bid worked out at $162.19 per CBOT share. But with the buyback price set at $560, CBOT shareholders who made the exchange and then participated in the buyback could theoretically net $196 per CBOT share.

CBOT is trading at $202.12 per share on the New York Stock Exchange.

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