UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) of THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 26, 2007
INTERCONTINENTALEXCHANGE, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-32671 | 58-2555670 | ||
| (State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification Number) |
2100 RiverEdge Parkway, Suite 500, Atlanta, Georgia 30328
(Address of Principal Executive Offices) (Zip Code)
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (770) 857-4700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrants under any of the following provisions (see General Instruction
A.2. below):
| þ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| þ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events
IntercontinentalExchange,
Inc. (“ICE”) issued a press release today announcing that
UBS Investment Bank and Société
Générale Corporate & Investment Banking have joined Morgan Stanley as co-advisors to ICE on its
proposal to combine with the Chicago Board of Trade. A copy of the press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. ICE will
host an investor call and presentation on Monday, March 26, at 8:30 a.m. Eastern time to provide
additional information regarding its proposed merger with CBOT. The presentation is available on
ICE’s website and additional details regarding the call are available in the attached press
release. The presentation is also attached to this Current Report on
Form 8-K as Exhibit 99.2.
Form 8-K as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits | |
| The following exhibits are filed as part of this Current Report on Form 8-K: | ||
| 99.1 Press Release dated March 26, 2007. | ||
| 99.2 Investor Presentation — Just the Facts, Additional Material dated March 26, 2007. |
Forward-Looking Statements — Certain statements in this Current Report on Form 8-K 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, 2006, as filed with the
SEC on February 26, 2007.
You should not place undue reliance on forward-looking statements, which speak only as of the date
of this Current Report on Form 8-K. Except for any obligations to disclosure 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 Current Report
on Form 8-K.
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 REGARDING THE PROPOSED TRANSACTION, IF
AND WHEN IT BECOMES AVAILABLE, BECAUSE IT 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
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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 2006 annual meeting of stockholders, dated
April 3, 2006. 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.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERCONTINENTALEXCHANGE, INC. |
||||
| /s/ Richard V. Spencer | ||||
| Richard V. Spencer | ||||
| Senior Vice President, Chief Financial Officer | ||||
Date: March 26, 2007
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EXHIBIT INDEX
| Exhibit No. | Description | |
99.1
|
Press Release dated March 26, 2007. | |
99.2
|
Investor Presentation — Just the Facts, Additional Material dated March 26, 2007. |
5
EXHIBIT 99.1
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
Subject Company:
CBOT Holdings, Inc.
(Commission File No. 001- 32650)
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)
INTERCONTINENTALEXCHANGE NAMES UBS AND SOCIÉTÉ GÉNÉRALE AS
CO-ADVISORS ON PROPOSAL TO COMBINE WITH CHICAGO BOARD OF TRADE
CO-ADVISORS ON PROPOSAL TO COMBINE WITH CHICAGO BOARD OF TRADE
ICE to Hold Investor Conference Call Today at 8:30AM EDT
Atlanta, GA (March 26, 2007) — IntercontinentalExchange, Inc. (NYSE: ICE) today announced that UBS
Investment Bank and Société Générale Corporate & Investment Banking have joined Morgan Stanley as
co-advisors to ICE on its proposal to combine with the Chicago Board of Trade (NYSE: BOT).
“UBS and Société Générale are two of the leading players in the global commodities business and we
are very pleased to have them on our team,” said Jeffrey C. Sprecher, Chairman and CEO of ICE.
“Their involvement indicates their support for our pro-competitive proposal to combine ICE and CBOT
and the many benefits it would bring to participants throughout the global derivatives
marketplace.”
Francois-Xavier Saint-Macary, Global Head of Commodities Markets for Société Générale, said, “As a
founding shareholder, a business partner, a user of — and major contributor to — their services,
Société Générale has been a strong supporter of ICE’s business model and growth strategy since the
creation of the company.”
Dennis Scurletis, Head of Morgan Stanley’s Futures Division, said, “As a participant in the futures
market, we would welcome any development that fosters greater competition. As a Firm, we have a
long-standing relationship with ICE and continue to be a shareholder in the company.”
UBS, Société Générale and Morgan Stanley are all ranked in the top 10 for Futures Commission
Merchant (FCM) operations, based on U.S. customer segregated funds.
Investor Conference Call
ICE will hold a conference call today at 8:30 a.m. EDT for the investment community to provide
additional information regarding its proposed merger with CBOT. Participants may listen via
telephone by dialing (888) 459-5609 if calling from the United States, or (973) 321-1024 if dialing
from outside of the United States. The passcode for all callers is 8621835. For participants on
the telephone, please dial in 10 minutes prior to the start of the call. A live audio webcast of
the call also will be available on the company’s website at www.theice.com under About ICE/Investor
Resources and on www.theicecbot.com under Webcasts & Presentations.
The call will be archived on ICE’s website for replay. A telephone replay will also be available
at (877) 519-4471 for callers within the United States and at (973) 341-3081 for callers outside of
the United States. The replay passcode is 8621835.
Additional Information
More information about the ICE proposal is available on the ICE website at www.theice.com under
About ICE/Investor Resources and at www.theicecbot.com.
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 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.
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
2
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, 2006, as filed with the SEC on February 26, 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 disclosure 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.
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 2006 annual meeting of stockholders, dated
April 3, 2006. 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
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
3
EXHIBIT 99.2
| Just the Facts Additional Materials March 26, 2007 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 Subject Company: CBOT Holdings, Inc. (Commission File No. 001- 32650) |
| Forward-Looking Statements - Certain statements in this presentation 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, 2006, as filed with the SEC on February 26, 2007. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Except for any obligations to disclosure 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 presentation. 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, IF AND 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 2006 annual meeting of stockholders, dated April 3, 2006. 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. |
| Well Positioned in High Growth Derivatives Markets (1) ICE / CBOT Products '05 - '06 Growth (%) 28.4% 25.9% 22.3% 37.8% 27.8% Fact: A pro forma ICE / CBOT would have access to all high growth asset classes through a diversified derivatives platform (2) (2) (2) (2) (3) Sources include Bank for International Settlement, BIS Triennial Central Bank Survey, ClientKnowledge and the Futures Industry Association Includes all futures and options on futures contracts as reported by the Futures Industry Association Includes trading of spot transactions, outright forwards and FX swaps |
| ICE is a High Growth Partner As disclosed on ICE's website ICE Y-o-Y Growth (%) 50% Growth Fact: ICE Futures has experienced greater than 50% Y-o-Y growth every month since 2005 with an average rate of 120% Fact: ICE's OTC business has generated greater than 50% Y-o-Y growth nearly every month since 2005 with an average rate of 91% |
| Undervalued With Significant Upside Potential Fact: Despite its faster revenue and earnings growth rate, ICE trades at a discount to CME AV / 2008 EBITDA ICE CME 14.1 17 2007 - 2009 EPS CAGR ICE CME 37.8 22.2 2007 - 2009 Revenue CAGR Long-Term Growth Rate Price / 2008 EPS ICE CME 24.1 30.3 Price / 2009 EPS (1) (1) (1) (1) (1) (1)(2) Mean I/B/E/S consensus estimates as of March 23, 2007 Calculated assuming fully diluted aggregate value; ICE pro forma for NYBOT acquisition ICE CME 30.5 15 ICE CME 23.2 22.9 ICE CME 18.6 24.6 |
| Buy Hold Sell East 0.7 0.3 0 Analysts Prefer ICE (1) FACT: Wall Street analysts expect ICE to produce stronger share price appreciation and have a more favorable rating recommendation when compared to the CME (1) Buy Hold Sell East 0.5 0.417 0.083 Avg. Price Target (2): $166.38 Current Price (2): $123.56 % Difference: 34.7% Avg. Price Target (2): $595.14 Current Price (2): $540.84 % Difference: 10.0% (1) Based on Wall Street research as reported by Bloomberg (2) Market data as of March 23, 2007 (1) (1) |
| Technology and Clearing |
| ICE is the True Innovator Fact: ICE's trading platform was designed, developed and maintained over the past 7 years solely by ICE engineers using state-of-the-art technology Fact: The new matching engine includes innovative, multi-generation implied spread matching that is unparalleled in the industry Fact: ICE brought the first truly web-based front-end, WebICE, to the exchange industry Fact: ICE's platform has real-time, screen-based risk management capabilities Fact: Both CME's matching technology, licensed approximately 20 years ago, and front-end technology were developed by external 3rd parties while ICE's technology has been built in-house by ICE engineers |
| State-of-the-Art Technology Platform Fact: ICE has one of the most advanced and flexible trading systems in the industry and competes aggressively with other trading platforms Fact: The updated version of ICE's futures platform, which will be rolled out in May 2007, has already been tested and produced round trip times of less than 10ms, making it the fastest platform in the derivatives industry Fact: ICE continues to deliver greater functionality and performance with less capex and fewer employees ICE information provided by ICE management; CME information disclosed in investor presentation on March 22, 2007 ICE performance since 2005; CME performance since 2004 Projected |
| Broader Distribution and More Competitive Pricing Fact: ICE's WebICE portal provides customers with access to ICE in nearly every country in the world versus CME's distribution in ~88 countries and foreign jurisdictions ICE's exploitation of the Internet allows new customers to connect to WebICE in less than five minutes versus the time required for CME customers to connect to mandatory direct lines and ISV gateway solutions Fact: Compared to NYMEX, ICE's closest comparison based on product mix, ICE's gross average rate per contract in 2006 was lower. ICE's rate per contract is not directly comparable to other non-energy derivatives contracts |
| Unparalleled OTC Capabilities 2003 2004 2005 2006 24.26 30.961 61.999 130.504 ICE OTC Volume 2003-2006 CAGR: 75% ICE OTC Contract Volume Fact: Over the past 5 years, ICE has built one of the most transparent and liquid OTC markets utilizing its superior technology platform and clearing capabilities Fact: ICE already has a major OTC business and will capitalize on this experience to develop OTC solutions for CBOT's products Fact: CME has yet to create a proven OTC market place and its OTC acquisitions have failed to generate meaningful volumes or revenues |
| Clearing Capabilities are In Place and Highly Scalable Fact: NYBOT's existing clearing system can handle CBOT's business On average, CBOT clears 809,000 transactions per day (1) Fact: Currently on modest hardware, NYBOT's existing clearing system can clear 1.2 million trades per day Fact: NYBOT's clearing system is based on new technologies such as Java, Oracle and IBM AIX Fact: Through hardware and software improvements already in process, ICE plans to improve NYBOT's clearing technology to the point where it can clear 10 million trades a day by the end of 2007; 5x greater than CBOT's peak volumes of 2 million (1) Fact: ICE believes it will be prepared to clear CBOT's volume by 2H'07 Clearing Capabilities Avg Daily Trades As disclosed in the CME investor presentation on March 22, 2007 |
| ICE Has a Proven Integration Track Record Fact: ICE has successfully integrated three transformational exchange acquisitions over the past seven years NYBOT ($1.1Bn) - Added Ags, clearing and an established trading floor IPE ($131MM) - Added listed products to OTC Continental Power Exchange Fact: ICE has consistently exceeded targets in integrating acquisitions and realizing synergies Fact: ICE has consistently created significant value in past transactions Fact: Former IPE and NYBOT owners have earned annual returns of 34% and 247%, respectively (1)(2) (1) Assumes IPE stockholders converted their Class A1 shares into common stock at the IPO and held them through the present (2) Represents the return on stock consideration as of March 23, 2007 |
| Combination Benefits Review |
| Wall Street Agrees with ICE Synergy Estimates... "While ICE projects $90 million in expense synergies from clearing benefits, we note that we already project CME to generate $108 million in 2008 from clearing CBOT products. We believe the potential loss of this high-margin revenue stream is also a significant reason for CME to challenge ICE's bid" Sandler O'Neill, March 16, 2007 "ICE's $240 mn of synergy estimates appear realistic and achievable given our initial analysis and ICE's past track record of over delivering on acquisitions and commitments to the investor community" Goldman Sachs, March 15, 2007 As reported by Citigroup in October 24, 2006 report, KBW in October 18, 2006 report, and Morgan Stanley in October 18, 2006 report |
| ....that are Less than CME & In-Line with Relevant Transactions ICE estimated expense synergies are realistic based on comparable announced deals, including the CME offer for CBOT (1) Excludes clearing expenses (2) High-end of expense synergy range Technology Related Administrative Trading Floor / Operations East 62.5 43.75 18.75 CME Estimated Expense Synergies $125 million Technology Related 50% Administrative 35% Trading Floor / Operational 15% Available to ICE: 85% or $106MM ICE Expense Synergies: $100MM > CME / CBOT ICE / CBOT NYSE / Euronext ASX / SFE 58.7 48.8 37.8 37 Comparable Transactions - Operating Expense Synergies as % of Target Cash Expenses (1) (1) (2) |
| Fact: ICE has factored in all relevant expenses and transaction costs, including over $17MM for clearing in 2009 In 2006, CBOT paid CME approximately $75 million for clearing services related to the Common Clearing Link (2) Upon the successful merger of ICE and CBOT and the termination of CME's clearing agreement in January 2009, the combined company would retain 100% of the clearing revenues To derive a run-rate 2009 clearing synergy estimate, ICE estimated growth in clearing service fees at 50% of CBOT's long-term growth rate and forecast ~$90 million of pre-tax synergies This estimate appears conservative when compared to research analyst estimates of revenue CME would generate from the Common Clearing Link in 2008 ICE estimated additional expenses would be required to move the clearing volumes, resulting in the $90 million of net benefit If an ICE / CBOT merger were consummated, CME would lose 100% of this high-margin revenue beginning in 2009 ICE's Clearing Strategy is Realistic As stated in Sandler O'Neill's March 16, 2007 ICE research report As stated in CBOT Holdings form 10-K filed on March 1, 2007 Clearing Synergy Breakdown ($MM) 2006A 2007E 2008E 2009E CBOT Clearing Services Fees to CME 75.4 84.8 95.4 107.4 Estimated Growth Rate N/A 12.5% 12.5% 12.5% Research Clearing Revenue Estimates For CME (1) 108.0 Incremental Margin 84% Estimated ICE Clearing Synergy 90.0 |
| Revenue Synergies are Substantial and Will be Shared ICE expects significant revenue synergies would result from a merger between CBOT and ICE Anticipated volume increases from side-by-side trading of agricultural commodities, equity indices and energy / ethanol OTC trading and clearing of CBOT products ICE is prepared to invest significant time and capital in the CBOT metals complex "'We want to do the thing that creates the most value for our shareholders, and that would be the NYMEX and Globex metals contracts,' CME Chief Executive Officer Craig Donohue stated... 'Frankly, the metals contracts on the Board of Trade are not in any way material to the transaction.'" Bloomberg News, March 8, 2007 Y-o-Y Growth (%): 510 568 542 1,453 2,270 1,400 1,716 1,146 873 853 747 336 212 250 CBOT Metals Monthly Average Daily Volume (1) As reported on the CBOT's website |