Investors trying to determine how to play their portfolios in regard to acquisition offers for the Chicago Board of Trade could consult Intrade Prediction Market Exchange, an online trading platform where participants can bet on four different outcomes of this contentious proposed acquisition.
Based on the Intrade trading activity, a merger of CBOT Holdings Inc and Chicago Mercantile Exchange Holdings Inc. is more than twice as likely to occur as a merger between CBOT and rival bidder IntercontinentalExchange Inc., said John Delaney, CEO of Dublin-based Intrade.
According to trading activity so far, 65% of participants believe a CBOT and CME merger most likely; 29% expect a CBOT and ICE merger; 2% foresee a merger between CBOT and another acquirer; and 4% expect CBOT to remain independent.
Contract prices for each scenario range up to $10. Each contract settles at $10 if the scenario occurs by the end of the year, or if the event does not occur, the value of the contract falls to zero. As of March 28, the CBOT/CME merger contract was bid at $6.50, while the asking price was $7. Its last trade was at $6.80.
BARRY B. BURR