Filed by IntercontinentalExchange, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934, as amended
Pursuant to Rule 425 under the
Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934, as amended
Subject Company:
CBOT Holdings, Inc.
(Commission File No. 001- 32650)
CBOT Holdings, Inc.
(Commission File No. 001- 32650)
ICE AND CBOE ENTER EXCLUSIVE AGREEMENT REGARDING CBOE
EXERCISE RIGHTS AS PART OF ICE’S PROPOSED MERGER WITH CBOT;
AGREE IN PRINCIPLE ON COMMERCIAL PARTNERSHIP
EXERCISE RIGHTS AS PART OF ICE’S PROPOSED MERGER WITH CBOT;
AGREE IN PRINCIPLE ON COMMERCIAL PARTNERSHIP
CBOT Full Members Holding CBOE Exercise Rights Would Receive
$500,000 in Value Per Exercise Right
$500,000 in Value Per Exercise Right
Resolution of Exercise Rights Dispute Removes Barrier to CBOE
Demutualization and Resolves CBOT Litigation
Demutualization and Resolves CBOT Litigation
Atlanta, GA (May 30, 2007) — IntercontinentalExchange, Inc. (NYSE: ICE) and the Chicago Board
Options Exchange (CBOE) today announced that they have entered into an exclusive agreement that, in
the context of a merger of ICE and CBOT Holdings, resolves the issues relating to the CBOE exercise
rights, and in other respects supports the business objectives of ICE and CBOE . Under the
agreement:
| • | Full Members of the Chicago Board of Trade holding CBOE exercise rights would receive $500,000 in value for each right, or up to $665.5 million in the aggregate, to resolve the issues relating to the exercise rights in a manner that would make clear that following a merger between ICE and CBOT, Full Members of CBOT holding the required interests would be compensated for the loss of the exercise right. |
| • | Consideration would be paid equally by CBOE and ICE, with holders of exercise rights being entitled to receive cash and/or debt securities convertible into both stock of the newly combined ICE/CBOT Holdings and common shares of CBOE after its demutualization. |
| • | The exclusive agreement between ICE and CBOE is contingent on the completion of the proposed merger of ICE and CBOT Holdings. |
| • | ICE and CBOE have entered into an agreement in principle for a broad commercial partnership, including technology and product development, and access to the distribution capabilities of each exchange. |
Unlike the acquisition of CBOT proposed by CME Holdings, which provides no value for the exercise
right eligibility of CBOT members, and no certain resolution to this critical issue, the ICE-CBOE
proposal would provide CBOT Full Members with immediate value for their exercise rights and the
ability to hold equity in CBOE following its planned demutualization. In addition, ICE and CBOE’s
agreement in principle regarding a commercial partnership provides an opportunity to create
on-going value for ICE stockholders and CBOE members.
“This strategic agreement would resolve existing litigation and uncertainty for both CBOT and CBOE
members, while unlocking substantial value for CBOT members, many of whom remain CBOT Holdings
stockholders. It also frees CBOE to pursue a demutualization for the benefit of its members, and
importantly, accelerates ICE’s ability to deliver value in options products for our stockholders
and customers,” said Jeffrey C. Sprecher, Chairman and CEO of ICE.
William J. Brodsky, CBOE Chairman and Chief Executive Officer, said, “We are pleased that ICE
sought to address the exercise right issue and we are delighted to participate in a proposal that
provides significant benefits for each organization. The offer provides CBOT members with
substantial value, liquidity, and for those who choose, equity participation in CBOE. This is a
unique opportunity to provide certainty for both CBOE and CBOT members, and to remove an obstacle
that has impeded progress for members at both exchanges.”
“This exclusive agreement with CBOE affirms ICE’s consistently stated intention to provide a
constructive resolution to this long-running dispute. We are eliminating a costly and potentially
open-ended distraction that would otherwise persist following a completed merger between ICE and
CBOT. We believe this agreement enhances our already superior proposal to merge with CBOT and
underscores ICE’s innovation and leadership,” said Sprecher.
He added, “ICE stockholders stand to benefit through an enhanced offer for CBOT as well as a
long-term cooperative relationship with the world’s premiere options exchange. The transaction
structure — in which ICE and CBOE jointly share the cost of resolving the member rights issue —
is a highly efficient use of capital.”
Exercise Rights Agreement
Under the CBOE charter, CBOT Full Members holding the required interests possess an exercise right to become and remain members of CBOE, and to trade on the CBOE, so long as such members remain CBOT Full Members. In connection with ICE’s proposal to merge with the CBOT, the agreement between
Under the CBOE charter, CBOT Full Members holding the required interests possess an exercise right to become and remain members of CBOE, and to trade on the CBOE, so long as such members remain CBOT Full Members. In connection with ICE’s proposal to merge with the CBOT, the agreement between
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ICE and CBOE makes clear that following the ICE/CBOT Holdings merger, CBOT Full Members holding the
required interests will no longer be eligible to use the exercise right and will be compensated for
the loss thereof. As part of this structure, the pending litigation between CBOE and CBOT would be
settled, eliminating a major barrier to CBOE’s plan to demutualize into a holding company
structure.
The transactions contemplated by the ICE/CBOE agreement require approval by a majority of CBOE
members and a majority of the voting power of the CBOT Series B-1 and B-2 members, and are
conditioned on completion of an ICE/CBOT Holdings merger. To be eligible to receive the
consideration, a CBOT Full Member would need to possess the required interests to exercise a CBOE
exercise right at a designated record date prior to the merger. These interests are comprised of
the following: (1) a Series B-1 membership in CBOT, (2) 27,338 shares of Class A stock of CBOT
Holdings, and (3) one CBOE exercise right privilege (ERP).
The financial details of the ICE/CBOE agreement are as follows:
| • | ICE and CBOE would each provide up to $332.75 million in consideration (or total consideration of $665.5 million) to fund payments to CBOT Full Members possessing the required interests to exercise a CBOE exercise right. |
| • | ICE would provide each CBOT Full Member possessing the required interests for the exercise of a CBOE exercise right the choice of (1) a cash payment of $250,000 or (2) in lieu of cash, a convertible debenture for common stock of the newly combined ICE/CBOT Holdings, which would be valued at $250,000. |
| • | Additionally, CBOE would provide each CBOT Full Member possessing the required interests for the exercise of a CBOE exercise right the choice of: (1) a cash payment of $250,000 or (2) in lieu of cash, a convertible debenture with a face value of $250,000, which will become convertible following any event in which the memberships of CBOE are converted into stock. The CBOE debentures would be convertible into 10% of the number of shares of stock that a regular membership of CBOE not obtained through the exercise right were converted into in any such transaction. |
Commercial Partnership
In addition to providing a mechanism for settling the long-standing CBOE exercise rights dispute, ICE and CBOE also announced an agreement in principle, subject to signing a definitive agreement, to collaborate on initiatives including:
In addition to providing a mechanism for settling the long-standing CBOE exercise rights dispute, ICE and CBOE also announced an agreement in principle, subject to signing a definitive agreement, to collaborate on initiatives including:
| • | CBOE providing technical assistance to ICE regarding the engineering and rollout of ICE’s new electronic options trading platform. |
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| • | CBOE providing electronic access to ICE’s options products for CBOE’s exchange members on its trading floor, supported through advertising on the CBOE member website and through member notices. |
| • | ICE and CBOE working together to develop futures products and related index options products that would be beneficial to members of both exchanges. Futures products would be listed on the ICE Futures trading platform and securities options would be listed on the CBOE trading platform. |
| • | ICE and CBOE investigating the possibility of making CBOE’s regulated futures products traded on its Chicago Futures Exchange available via ICE’s electronic trading platform, thereby broadening the distribution of such products to both CBOE and ICE members. |
Sprecher concluded, “We have carefully listened to both the CBOT members and ICE stockholders
throughout this process. We are confident that today’s announcement makes our proposal to merge
with the CBOT even more compelling. In addition, our proposed business partnership with CBOE would
benefit ICE stockholders by accelerating ICE’s existing growth prospects and creating an enhanced
market position for the combined ICE/CBOT.”
ICE: CBOT Member Meeting
As previously announced, ICE will hold a meeting for CBOT members to discuss the benefits of an ICE/CBOT combination, including today’s agreement between CBOE and ICE. The CBOT member meeting will be held in Chicago at 3:30 p.m. CDT on Thursday, May 31, 2007. Chicago Board of Trade Members should dial (800) 562-1675 to register. Other interested parties are invited to listen via conference call by dialing as follows: Domestic Participants: (888) 792-8398; International Participants: (973) 582-2773. The passcode is 8847664. A live audio webcast of the meeting also will be available on the Company’s website at www.theice.com under About ICE/Investor Relations and at www.theicecbot.com.
As previously announced, ICE will hold a meeting for CBOT members to discuss the benefits of an ICE/CBOT combination, including today’s agreement between CBOE and ICE. The CBOT member meeting will be held in Chicago at 3:30 p.m. CDT on Thursday, May 31, 2007. Chicago Board of Trade Members should dial (800) 562-1675 to register. Other interested parties are invited to listen via conference call by dialing as follows: Domestic Participants: (888) 792-8398; International Participants: (973) 582-2773. The passcode is 8847664. A live audio webcast of the meeting also will be available on the Company’s website at www.theice.com under About ICE/Investor Relations and at www.theicecbot.com.
The call will be archived on ICE’s website and on www.theicecbot.com. A replay will be available at
(877) 519-4471 for callers within the United States and at (973) 341-3080 for callers outside of
the United States. The replay passcode is 8847664.
About IntercontinentalExchange
IntercontinentalExchange® (NYSE: ICE) operates the leading global, electronic marketplace for trading both futures and OTC energy contracts and the leading soft commodity exchange. ICE’s markets offer access to a range of contracts based on crude
IntercontinentalExchange® (NYSE: ICE) operates the leading global, electronic marketplace for trading both futures and OTC energy contracts and the leading soft commodity exchange. ICE’s markets offer access to a range of contracts based on crude
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oil and refined products, natural gas, power and emissions, as well as agricultural commodities
including cocoa, coffee, cotton, ethanol, orange juice, wood pulp and sugar, in addition to
currency and index futures and options. ICE® conducts its energy futures markets through
its U.K. regulated London-based subsidiary, ICE Futures, Europe’s leading energy exchange. ICE
Futures offers liquid markets in the world’s leading oil benchmarks, Brent Crude futures and West
Texas Intermediate (WTI) Crude futures, trading nearly half of the world’s global crude futures by
volume of commodity traded. ICE conducts its agricultural commodity futures and options markets
through its U.S. regulated subsidiary, the New York Board of Trade®. For more than a
century, the NYBOT® has provided global markets for food, fiber and financial products.
ICE was added to the Russell 1000® Index on June 30, 2006. Headquartered in Atlanta,
ICE also has offices in Calgary, Chicago, Houston, London, New York and Singapore. For more
information, please visit www.theice.com and www.nybot.com.
About CBOE
CBOE, the largest U.S. options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE website at: http://www.cboe.com/.
CBOE, the largest U.S. options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE website at: http://www.cboe.com/.
Forward-Looking Statements — Certain statements in this press release may contain forward-looking
information regarding IntercontinentalExchange, Inc., CBOT Holdings, Inc., and the combined company
after the completion of the possible merger that are intended to be covered by the safe harbor for
“forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995.
These statements include, but are not limited to, statements about the benefits of the merger
transaction involving ICE and CBOT, including future strategic and financial benefits, the plans,
objectives, expectations and intentions of ICE following the completion of the merger, and other
statements that are not historical facts. Such statements are based upon the current beliefs and
expectations of ICE’s management and are subject to significant risks and uncertainties. Actual
results may differ materially from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ materially from those
expressed or implied in such forward-looking statements regarding the success of the proposed
transaction: the failure of CBOT to accept ICE’s proposal and enter into definitive agreements to
effect the transaction, the risk that the revenue opportunities, cost savings and other anticipated
synergies from the merger may not be fully realized or may take longer to realize than expected;
superior offers by third parties; the ability to obtain governmental approvals and rulings on or
regarding the transaction on the proposed terms and schedule; the failure of ICE or CBOT
stockholders to approve the merger; the risk that the businesses will not be integrated
successfully; disruption from the merger making it difficult to maintain relationships with
customers, employees or suppliers; competition and its effect on pricing, spending and third-party
relationships and revenues; social and political conditions such as war, political unrest or
terrorism; general economic conditions and normal business uncertainty. Additional risks and
factors are identified in ICE’s filings with the Securities and Exchange Commission (the “SEC”),
including ICE’s Annual Report on Form 10-K for the year ended December 31,
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2006, as filed with the SEC on February 26, 2007 and ICE’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007, as filed with the SEC on May 4, 2007.
You should not place undue reliance on forward-looking statements, which speak only as of the date
of this press release. Except for any obligations to disclose material information under the
Federal securities laws, ICE undertakes no obligation to publicly update any forward-looking
statements to reflect events or circumstances after the date of this press release.
Important Merger Information
In connection with the proposed transaction, and assuming the merger proposal is accepted by CBOT, ICE intends to file relevant materials with the SEC, including a proxy statement/prospectus regarding the proposed transaction. Such documents, however, are not currently available. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ALL SUCH OTHER RELEVANT MATERIALS REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a free copy of the proxy statement/prospectus, if and when such document becomes available and related documents filed by ICE or CBOT without charge, at the SEC’s website (http://www.sec.gov). Copies of the final proxy statement/ prospectus, if and when such document becomes available, may be obtained, without charge, from ICE by directing a request to ICE at 2100 RiverEdge Parkway, Suite 500, Atlanta, Georgia, 30328, Attention: Investor Relations; or by emailing a request to ir@theice.com.
In connection with the proposed transaction, and assuming the merger proposal is accepted by CBOT, ICE intends to file relevant materials with the SEC, including a proxy statement/prospectus regarding the proposed transaction. Such documents, however, are not currently available. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ALL SUCH OTHER RELEVANT MATERIALS REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a free copy of the proxy statement/prospectus, if and when such document becomes available and related documents filed by ICE or CBOT without charge, at the SEC’s website (http://www.sec.gov). Copies of the final proxy statement/ prospectus, if and when such document becomes available, may be obtained, without charge, from ICE by directing a request to ICE at 2100 RiverEdge Parkway, Suite 500, Atlanta, Georgia, 30328, Attention: Investor Relations; or by emailing a request to ir@theice.com.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy the
securities, nor shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
ICE and its directors, executive officers and other employees may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction. You can find information about
ICE’s executive officers and directors in ICE’s Annual Report on Form 10-K, filed with the SEC on
February 26, 2007 and in ICE’s proxy statement for its 2007 annual meeting of stockholders, dated
March 30, 2007. Additional information about the interests of potential participants will be
included in the prospectus/proxy statement, if and when it becomes available, and the other
relevant documents filed with the SEC.
Contact:
IntercontinentalExchange:
Kelly Loeffler
VP, Investor Relations and Corporate Communications
(770) 857-4726
kelly.loeffler@theice.com
IntercontinentalExchange:
Kelly Loeffler
VP, Investor Relations and Corporate Communications
(770) 857-4726
kelly.loeffler@theice.com
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Sard Verbinnen & Co
Jim Barron/Kara Findlay
(212) 687-8080
Brad Wilks
(312) 895-4700
Jim Barron/Kara Findlay
(212) 687-8080
Brad Wilks
(312) 895-4700
Crystal Clear Communications
Ellen G. Resnick
(773) 929-9292; (312) 399-9295 (c)
eresnick@crystalclearPR.com
Ellen G. Resnick
(773) 929-9292; (312) 399-9295 (c)
eresnick@crystalclearPR.com
CBOE:
Carol Kennedy
VP, Corporate Communications
(312) 786-7323
Kennedyc@cboe.com
Carol Kennedy
VP, Corporate Communications
(312) 786-7323
Kennedyc@cboe.com
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