The New York Mercantile Exchange, the world’s largest energy market, is reportedly exploring a sale for about $14.3 billion. Nymex was reported to be holding informal acquisition negotiations with three exchanges, including the CME, and the fate of the energy and metals specialist inserts an additional twist to the complicated consolidation being carried out in the global derivatives sector. CBOT and Nymex contest in the metals business, while the New York group is in a 10-year agreement with CME to list its energy and futures on gold, silver, copper and aluminium on the Merc’s electronic platform.
According to reports, Top Nymex executives have met their corresponding persons at three prospective suitors NYSE Euronext, Deutsche Boerse AG and Chicago Mercantile Exchange Holdings Inc. However, CME has denied the reports saying it is not currently in any discussions with Nynex regarding a merger or acquisition. CME further said that it remains focused on completing its merger with CBOT Holdings. CBOT is in the middle of a merger settlement and the recent development at Nymex underscores the fact that what a turbulent period this is for the world’s financial markets, as they concentrate almost as much on purchasing and selling each other as they generally do on trading products.
However, the two Chicago exchanges have so far to reveal how they would settle the impending conflicts as they pursue the project for their own merger in the middle of a unfriendly counter-offer for CBOT from the IntercontinentalExchange, the main competitor of Nymex in the energy futures market. On the other hand, it is also reported that people close with Nymex have indicated that a deal does not seem to be forthcoming for the moment. Nevertheless, reports suggested that the plan of a sale has been under contemplation since Nymex’s November 2006 initial public stock offering.
According to the reports, banks have not yet been appointed to advise the company on the prospective sale. However, acquiring Nymex would allow a traditional cash equities exchange to append more products to the trading combination it can offer its clients. It trades contracts including crude oil, heating oil and gasoline futures. Exchanges have been engaged in consolidating globally in recent years as they are trying hard to slash costs and broaden their product range, in an effort to maintain pace with the expanding presence of their clients.
