No real common thread here. Just three observations.
1. Cape Fear [not the movie].
Cape Fear Bank Corporation announced yesterday that it has reached agreement with a group of investors led by Maurice Koury about reconstituting its board of directors.
The two biggest advisory services rather forced their hand in this. RiskMetrics (ISS) supported two of Koury's nominees: James S. Mahan III and Mort Neblett. Glass Lewis also supported two: Mr. Mahan and David Lucht.
Under the settlement, the reconstituted board will include each of those three gentlemen, as well as another Koury nominee: Scott Sullivan.
The company likely knew a challenge was coming as soon as it reported, back in April, that it had identified material weaknesses in its internal controls over financial reporting. Glass Lewis' report said: "We believe such material weaknesses may signal weak internal accounting expertise, poor internal controls, and aggressive financial reporting practices at the company."
2. CME/Nymex
Both of the two sets of shareholders involved have now voted in favor of a deal that has CME Group acquiring the New York Mercanrtile Exchange for $7.6 billion. The two exchanges said in a statement that they expect to close on the deal by the end of this year.
The board of directors of CME will be expanded to included three directors from Nymex.
Brad Hintz, an analyst at Sanford Bernstein, is being quoted today thus: "CME wants this so badly because the futures market is ... one of the few monopolies left in the world. And it's a monopoly because they have their own clearing operation."
I beg to differ. It isn't a monopoly, although I do understand the point that the vertical link between an exchange and a clearing operation creates or enhances market power.
3. AIG returns to UK subprime.
American International Group has become the first US based party to subprime mortgage market in the United Kingdom.
Specifically, AIG has agreed to fund the launch of a non-conforming lender, Link Loans, through its subsidiary, Ocean Money.
So reports FTAdviser this morning, in a story by Joe McGrath.
To what does a nonconforming lender not conform? Is this someone who wears long hair and stays ahead of the curve on drug use? No ... that would be a nonconformist. A different matter. A nonconforming lender is a non-bank institution that offers loans to creditors who wouldn't meet the standards of a bank.
Is such activity about to pick up again, a little more than a year after the big chill began? Or is the AIG action an arrant outlier? For now, I'm guessing the latter.
Showing posts with label CME Group. Show all posts
Showing posts with label CME Group. Show all posts
Tuesday, August 19, 2008
Sunday, August 10, 2008
CME/Nymex
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.
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.
Sunday, August 3, 2008
CME Buying Nymex: Advisory firms & politicians approve
Two leading proxy advisory firms have recommended the CME Group shareholders for in favor of the acquisition of the New York Mercantile Exchange at the shareholders' meeting August 18.
"Consolidation among exchange operators continues to be a viable growth strategy. The transaction will result in a more competitive exchange, offers NYMEX Holdings shareholders a financially fair consideration and is expected to be accretive to earnings for the surviving shareholders of CME Group," is how Glass Lewis put the key point.
This has never really become the political football it might have. There is a lot of talk in the halls of Congress these days about speculators and institutional investing and how forces at work through the commodities exchanges may be driving the price of crude oil and/or the price of gasoline higher than the underlying supply and demand considerations would warrant.
If there's any truth to that theory at all, the Nymex is key. And exchange consolidation could easily be portrayed, by a politician looking for a point to make, as a way of easing the least productive or rational or consumer-friendly forms of speculation out there. [I'm not making such a point, mind you, only commenting on what some hypothetical demagogue might be able to put together in this line].
But our politicians seem to be smiling rather benignly upon the CME/Nymex nuptials.
Get these mergers and acquisitions done while the gettin' is good. The climate may turn.
"Consolidation among exchange operators continues to be a viable growth strategy. The transaction will result in a more competitive exchange, offers NYMEX Holdings shareholders a financially fair consideration and is expected to be accretive to earnings for the surviving shareholders of CME Group," is how Glass Lewis put the key point.
This has never really become the political football it might have. There is a lot of talk in the halls of Congress these days about speculators and institutional investing and how forces at work through the commodities exchanges may be driving the price of crude oil and/or the price of gasoline higher than the underlying supply and demand considerations would warrant.
If there's any truth to that theory at all, the Nymex is key. And exchange consolidation could easily be portrayed, by a politician looking for a point to make, as a way of easing the least productive or rational or consumer-friendly forms of speculation out there. [I'm not making such a point, mind you, only commenting on what some hypothetical demagogue might be able to put together in this line].
But our politicians seem to be smiling rather benignly upon the CME/Nymex nuptials.
Get these mergers and acquisitions done while the gettin' is good. The climate may turn.
Wednesday, March 12, 2008
CME Buying Nymex
In an entry here four months ago, I asked Who Wants to Buy Nymex?
At that time, the Chicago Mercantile Exchange was an unlikely candidate for that honor, because CME had just completed an acquisition of the long-time cross-town rival, the Chicago Board of Trade.
Now, though, the juices of digestion seem to have done their work, and CME is back at the table. Nymex is the new dish according to reports coming out. of the Futures Industry Association's annual meeting.
One new complication: the US Justice Department has in the meantime made some noise about how it would like to enhance the level of competition amongst exchanges.
But the antitrust division's focus isn't on horizontal issues (acquisition of one exchange by another) so much as it is on vertical issues (maintenance by an exchange of its own captive clearing corporation). It is of the opinion that if exchanges and clearing houses were separate, there'd be lots of new entrants, entrepreneurs would be starting up new exchanges faster than the older ones could merge with each other.
Or, in antitrust jargon, the vertical tie creates a barrier to entry.
Both the Nymex and the CME group have such a "captive exchange," which presumably will be merged as the mother corporations merge. If the merging parties have their druthers. Which may not be.
What I'm leading up to is a guess, or to be nicer to myself a speculation. The antitrust division MAY end up approving the merger of the exchanges only on the condition that they spin-off their clearing operation(s).
Just free-associating here ... members of the Democratic Party might see some hope for their own future in the very existence of CME/Nymex talks. After all, if two certain Senators -- one representing Illinois and one representing New York -- can kiss and make up, they'll have their dream ticket.
McCain simply represents the Justice Department merger review!
At that time, the Chicago Mercantile Exchange was an unlikely candidate for that honor, because CME had just completed an acquisition of the long-time cross-town rival, the Chicago Board of Trade.
Now, though, the juices of digestion seem to have done their work, and CME is back at the table. Nymex is the new dish according to reports coming out. of the Futures Industry Association's annual meeting.
One new complication: the US Justice Department has in the meantime made some noise about how it would like to enhance the level of competition amongst exchanges.
But the antitrust division's focus isn't on horizontal issues (acquisition of one exchange by another) so much as it is on vertical issues (maintenance by an exchange of its own captive clearing corporation). It is of the opinion that if exchanges and clearing houses were separate, there'd be lots of new entrants, entrepreneurs would be starting up new exchanges faster than the older ones could merge with each other.
Or, in antitrust jargon, the vertical tie creates a barrier to entry.
Both the Nymex and the CME group have such a "captive exchange," which presumably will be merged as the mother corporations merge. If the merging parties have their druthers. Which may not be.
What I'm leading up to is a guess, or to be nicer to myself a speculation. The antitrust division MAY end up approving the merger of the exchanges only on the condition that they spin-off their clearing operation(s).
Just free-associating here ... members of the Democratic Party might see some hope for their own future in the very existence of CME/Nymex talks. After all, if two certain Senators -- one representing Illinois and one representing New York -- can kiss and make up, they'll have their dream ticket.
McCain simply represents the Justice Department merger review!
Sunday, November 25, 2007
Who Wants to Buy Nymex?
It has been a big year for consolidation among stock, options, and futures exchanges worldwide. It just seems to make sense, as the geographical proximity grows less relevant to investors, traders, and brokers alike.
The London Stock Exchange is now about one-third owned by enterprises that are themselves the arms of two rival Gulf states. Eventually, it seems the LSE will enter into a combination either with the Qatar Investment Authority or with the Dubai Borse. Which one? -- that is in Allah's hands.
The Chicago Mercantile Exchange and the Chicago Board of Trade, once fierce rivals despite their proximity, are now among the parts of the CME Group.
The New York Board of Trade is now a subsidiary of Atlanta based Intercontinental Exchange.
That will suffice for examples for now, though it would be easy to lengthen the list, even staying strictly within developments of 2007.
This leaves the question: why is Nymex still a stand-alone? and how long will that remain the case?
Steven Sears, writing in Barron's recently, suggested one reason. The internal politics at Nymex is, he says, of such distressing complexity that a potential acquirer might wisely want to steer clear of it. In the same way that a wise superpower might want to avoid sending an occupation force to a country with ... oh, never mind.
The London Stock Exchange is now about one-third owned by enterprises that are themselves the arms of two rival Gulf states. Eventually, it seems the LSE will enter into a combination either with the Qatar Investment Authority or with the Dubai Borse. Which one? -- that is in Allah's hands.
The Chicago Mercantile Exchange and the Chicago Board of Trade, once fierce rivals despite their proximity, are now among the parts of the CME Group.
The New York Board of Trade is now a subsidiary of Atlanta based Intercontinental Exchange.
That will suffice for examples for now, though it would be easy to lengthen the list, even staying strictly within developments of 2007.
This leaves the question: why is Nymex still a stand-alone? and how long will that remain the case?
Steven Sears, writing in Barron's recently, suggested one reason. The internal politics at Nymex is, he says, of such distressing complexity that a potential acquirer might wisely want to steer clear of it. In the same way that a wise superpower might want to avoid sending an occupation force to a country with ... oh, never mind.
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