Sunday, August 10, 2008


The proposed CME/Nymex deal continues to roll happily along.

Personally, I'm surprised at how easily this is going. But I've said that before.

What I ought to add today is that Cataldo Capozza now says he won't seek an injunction against the upcoming votes.

Mr. Capozza is an original member and thus a stockholder in Nymex who believes that exchange is worth a good deal more than the CME is paying. But of course that belief isn't enough to get an injunction.

He had apparently planned to seek an injunction on the basis that the CME wasn't making adequate disclosures in its proxy materials. But in Friday's statement he congratulates CME on its latest disclosures, which clear this hurdle.

The latest disclosures don't seem like much of a ticking timebomb to me. They include the following: "In the summer of 2007, representatives of one potential acquiror indicated to the management of NYMEX Holdings that, subject to approval of such acquiror’s board of directors, the acquiror might be interested in acquiring NYMEX Holdings for cash and stock with a combined value of $142 per share of NYMEX Holdings’ common stock, based on then-current stock prices. However, no bid was ever received."

Fine. But what's on the table is what's on the table.

"At the conclusion of the meetings on January 24, 2008, Mr. Schaeffer and Dr. Newsome concluded that further attempts to negotiate price terms would create a significant risk that a deal would not be struck. At the Board meeting the next day, Mr. Schaeffer and Dr. Newsome explained their opinion to the Board and recommended that the Board not engage in further attempts to negotiate price at that time."

And so forth.

Mr. Capozza seems resigned (and I'm reading between the lines a bit here) to the likelihood that the deal will be approved by the voters and will close. What is more explicit in his statement is his contingency plan: "If the shareholders approve the sale, we will seek damages to compensate the shareholders for billions of dollars NYMEX management left on the table."

That might prove interesting. But in the meantime the consolidation of exchanges will have rolled forward.

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