CME Holds Talks to Buy Nymex for About $11.1 Billion

CME Holds Talks to Buy Nymex for About $11.1 Billion

Jan. 28 (Bloomberg) -- CME Group Inc., the world's largest futures exchange, is in preliminary talks to acquire Nymex Holdings Inc. for about $11.1 billion to gain the biggest energy- trading market.

CME Group, created in July by the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade, would pay about $119.20 in cash and stock for every Nymex share, the companies said in a statement today. They have agreed to enter into exclusive negotiations for 30 days.

An acquisition would build on a two-year-old partnership between the two exchanges to give CME Group control in trading contracts that set prices on everything from oil to U.S. Treasuries, as well as equity indexes and wheat. CME Group's Globex trading system handles more than half the trading in Nymex energy and precious metals contracts, under a 2006 agreement that let Nymex fend off competition from all-electronic rivals.

``Nymex is probably not big enough to survive as an island in this ongoing consolidation of exchanges,'' said William Cline, former managing partner of the consulting company Accenture Ltd. ``For the CME, it's a natural extension to move more into energy products.''

CME Group rose $16.35, or 2.6 percent, to $645.35, while Nymex gained $8.32, or 7.8 percent, to $115.48 at 10:26 a.m. in New York Stock Exchange composite trading.

``Discussions are in early stages,'' the exchanges said. ``The terms of any potential transaction may be materially different from what is being discussed.''

Consolidation Wave

Exchanges are racing to meet investor demand for a low-cost way to trade across asset classes and time zones, striking more than $41 billion worth of mergers and acquisitions in the past year, according to Bloomberg data.

NYSE Euronext, owner of seven securities markets in Europe and the U.S., agreed to pay $260 million for the American Stock Exchange earlier this month to bolster its fast-growing options and fund trading business.

CME Group said it expects to maintain the Nymex trading floor in Manhattan.

BLOOMBERG