CME Group Inc. is putting out feelers to the Chicago Board Options Exchange about a takeover that would value the biggest U.S. stock-options market at as much as $5 billion.
Acting through intermediaries, officials at the exchanges have held informal discussions over the past month about a combination, sources tell Crain's Chicago Business, a sister publication of Pensions & Investments. No formal bid is on the table, and further talks are on hold until after Oct. 21, the last day for filing appeals in a lawsuit that must be resolved before any deal can be cut.
Adding CBOE to CME's stable would put Chicago's three biggest exchanges under one roof, bolstering the city's position as a center of trading and finance. It would give CME, already the largest futures exchange company, a dominant position in stock options.
A deal also would mean a big payday for CBOE members, who have watched members of nearby exchanges cash out already. A $5-billion price tag would value each CBOE seat at about $4 million, about 50% more than they fetch today.
"As far as I am concerned, something is going to happen," said Thomas Caldwell, chairman of New York-based Caldwell Asset Management Inc., whose 49 CBOE seats make him one of the exchange's biggest investors. Although he's not aware of any specific talks, he said, "The timing is right, the dancing partner is right. Everything is a fit."