(Reuters) — CME Group Inc.'s planned acquisition of NYMEX Holdings Inc. may be derailed due to heavy opposition from shareholders, the Financial Times reported on Monday.
The terms of the purchase by CME Group, the world's largest derivatives exchange, of the New York-based energy exchange were finalized in March, but the deal has faced increasing opposition from NYMEX shareholders after the value of CME's original bid in January dropped by $2 billion — or some $20 per share — to $9 billion after CME's shares fell.
The Financial Times reported one shareholder group planned to vote down the deal if CME did not raise its bid back up to near its original level.
The deal, that would create a U.S.-listed futures behemoth controlling 98 percent of the market, must be approved by three-quarters of NYMEX's members, meaning only 205 votes against the deal out of 816, would derail it, a threshold one stockholder says is within reach.
Shares of both companies dropped sharply in February after the U.S. Department of Justice issued a letter expressing concern that financial futures exchanges' ownership of clearing operations impedes competition. Investors feared any move to limit clearing operations would lessen profitability.
Another source of contention is the $612,000 price NYMEX offered its seatholders for their trading rights. One long-time seatholder told Reuters on Friday they are worth at least $800,000.
Several shareholders have filed a class-action lawsuit in Delaware against NYMEX and its senior management, including NYMEX Chairman Richard Schaeffer and President James Newsome, alleging they have undersold the energy exchange.
CME Group Inc has hinted that it would not substantially raise its bid for NYMEX and expects NYMEX management to sell the deal to shareholders.
"What would their alternatives be if they were to turn us down?" CME Chief Financial Officer James Parisi asked of NYMEX shareholders in May at an analyst conference.
NYMEX management was set to face NYMEX members on June 3, but that meeting has been rescheduled twice and will now take place on June 19.
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