By Ros Krasny
NEW YORK (Reuters) - IntercontinentalExchange Inc. (ICE.N: Quote, Profile, Research, Stock Buzz) is confident its bid for CBOT Holdings Inc. BOT.N will be accepted and that it will be able to integrate the much larger exchange, Chief Executive Jeffrey Sprecher said on Wednesday.
The upstart Atlanta energy exchange made a higher, unsolicited bid for the Chicago Board of Trade parent in March, throwing into chaos Chicago Mercantile Exchange Holdings Inc.'s CME.N plan to buy the number two U.S. futures exchange.
Almost two months on, ICE is waiting to hear whether CBOT is prepared to change course. CBOT's board has been doing due diligence on the surprise ICE bid for several weeks and has said it will be done with that process soon.
"I was confident that we had a better offer on the day we made the proposal for a lot of reasons. Obviously one was price," Sprecher told the Reuters Exchanges and Trading Summit in a phone interview, adding that since the offer was made, "our stock has continued to outperform that of CME."
CME's stock price is down about 10 percent since March 14, the day before ICE's bid was unveiled. ICE is up 2.2 percent in that time, pushing the premium of its bid for CBOT to more than 25 percent, against less than 15 percent in mid-March.
"The performance of ICE's stock relative to the CME poses an interesting scenario as they both attempt to acquire the CBOT," analyst Richard Repetto, a principal at Sandler O'Neill in New York, said in a research note this week.
Sprecher said a combined ICE-CBOT could move into untapped areas of over-the-counter interest rate and agricultural derivative trading, following the lead of the core ICE energy offering.
"Our platform is designed for OTC trading and we've been in OTC from the get-go," he said.
The U.S. Department of Justice is still reviewing the CME-CBOT merger proposal, which was announced in October.
A combination of the two largest U.S. futures marts would create an entity with more than 85 percent of futures and options-on-futures trading volume. An ICE-CBOT combination would be smaller but, ICE suggests, more diverse.
"I have no idea what the DOJ view is," Sprecher said. "Only that they've involved a lot of people."
"It would be really bad for our industry to have a single dominant futures exchange with a single clearing system. I don't see how that entity in any way enhances global competition."
In afternoon trading on the New York Stock Exchange, CME was trading at $505.33, down $3.42, or 0.6 percent. ICE was at $135.05, up 35 cents, or 0.3 percent, with CBOT at $194.00, down $1.06, or 0.5 percent.
(For more on the Reuters Exchanges and Trading Summit, see ID:nN07328661
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