INTERCONTINENTALEXCHANGE, INC./CBOT HOLDINGS, INC.
Filed by IntercontinentalExchange, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14a-6 under the
Securities Exchange Act of 1934, as amended
CBOT Holdings, Inc.
(Commission File No. 001-32650)
ICE: CBOT Holdings Member Reception
Wednesday, June 27, 2007
JEFF SPRECHER, Chairman & CEO of ICE: So, anyway so bear with me while I read these prepared
remarks. First of all, I just want to thank you guys all for coming and its really great and we
really are trying to reach out to people that are touch stones that can give us feedback and as you
may have heard me say before, very, I cant get feedback from your Board of Directors, so weve had
to bypass them. Im sure theyre not thrilled about it, but its the only way we have to deal with
the process so we really are interested in your feedback because were trying to find something
that works for the members and the Board of Trade and the shareholders of ICE, the shareholders and
the Board of Trade and potentially, even the members and shareholders of the CBOT. So, let me just
say the prepared remarks and hopefully we can then have a more meaningful conversation.
I want to say, you know, weve taken a lot of pride in the direct and honest approach that
weve been able to take with you and the feedback that weve gotten and I really still believe that
our companies together, are the best fit for the industry. You are becoming a fast growing
company, whether you realize it or not, and Im going to show you some graphs around the room here
that will show you what the analysts think of your company. And as youve probably watched our
stock and watched us perform over the last few months, we are a very fast growing company and Im
interested in the growth opportunities that we can bring together.
Theres been a lot of inaccuracies put out there about ICE and were at a disadvantage in that
we dont know all you guys for 30 years, were from a different city, Atlanta, and we dont have
the ability to counter everything that youre hearing. We also dont have the ability to deal with
the Chicago press in the same way that you all do as incumbents and so, let me just say theres a
lot of rhetoric out there about our capabilities
about who we are and what we do and I cant address it all, but we sense you have concerns. I hope
that youll give us feedback and let us talk to you about it.
So putting that aside, I really just want to talk to you about a couple of points that I hope
that youll consider about the decision that you have in front of you. And thats really; I think
what youre all focused on with this vote coming up. Your business today is incredibly vibrant and
you probably see that, for those of you that are on the floor or for those of you that least need
to talk to people that are trading with your seats. Your growth rates are higher today than the
Chicago Mercantile Exchange is, and youre in a position of strength relative to the CME thats
trying to buy you on the cheap. They are, CME is effectively, indirectly threatening your Board
and you, as shareholders and members, that they will steal your business if you dont do this deal.
And I, as I said in the last time I got in front of you, I think you all control the liquidity,
you are the bonds business, you are the aggs business and I dont think anyone can steal it unless
you collectively want it to go somewhere. And that liquidity is what you own and thats the value
of the Board of Trade and you are, you are the value; you and thousands of other people that you
know and have grown up with in this business.
So, I do not have any fear about that. I am willing to put my company and my shareholders at
risk and my own money at risk, because I see what has happened when others have tried to come in
and take liquidity and it has not been successful when people dont want it to move. And so, any
other owner of the Board of Trade other than the CME, have to deal with this issue and your Board
is saying right now that there can be no other owner of the Board of Trade because of that issue.
That, in my mind, is the catastrophe that they are talking about and I dont believe its real and
Im willing to put my money at stake.
I would say to you that every exchange that weve acquired and other exchanges in this
commodities business, like life or the derivatives business like ICE, has traded at a significant
premium to its stock value and I dont see any reason that you should be any
different and Im not here to try to buy you on the cheap. Im trying to find the value that works
for you guys and your shareholders and my shareholders to unlock the combined growth that we can
get, which is what allows people to do mergers at a premium. I think that you may have seen in
Trades today and in other articles, theres growing momentum against voting no on this proposal,
and some of the largest shareholders that are sophisticated investors that are looking at your
stock price and looking at the companys performance and thinking of you as a standalone business,
agree with, and that is why they have voted no.
I think your clearing revenues are obviously extremely important revenues. Theyre part of
what ICE has said we would bring into our deal and literally, youve got $100 million in clearing
revenues around your business that will inure to a business that can internalize clearing. Part of
the premium that were offering is essentially to offer to pay the Board of Trades shareholders
for bringing that in-house and youve already effectively given that away to the CME and
unfortunately, they dont have an ability or a willingness to pay you for those clearing synergies.
We do; they are going to grow. Obviously, in a 50/50 merger that were proposing, my shareholders
would have half of the upside growth after paying you for what we have now and you would continue
to have half the upside growth, not a third.
You are essentially a fast growing exchange, your earnings estimates during the period that
weve been talking, the ICE and the Board of Trade members, you, your estimates that the street has
put out there have grown by 25%. During that same period, the CMEs estimates have grown by 2% and
you can see some graphs that Ive put around the room here and we filed them with the SEC; theyre
available if you want to download them off the EDGAR/SEC website. It shows you how the street has
readjusted your estimates. Why? Because your interest rate complex and your aggs are growing and
theyre growing fast. Theres been an obviously a change in the interest rate curve environment.
I think its a long-term shift. Were seeing the beginning of what used to be a
flat yield curve starting to change and you guys are seeing the benefit of it, Im sure, in
your trading volumes and the aggs have been on fire ever since you guys have been distributing them
You essentially, while ICE has kept its focus, its exchange ratio the same at 1.42 since the
time weve been in here; ICE is a fast growing exchange. The two of us have been fast growing and
so youve seen a relative premium continue to be built in our stock. CME is a slow growing
exchange thats had to continue to bump their bid in order to try to keep up with your organic
stock price growth and thats because they, essentially, have been a flat growing exchange right
now. They need your growth. They should either pay you for it or get out of the way, in my mind.
But why you would want to give their shareholders two thirds of it and keep a third is, to me, a
bad trade and thats what weve been advertising through this proxy solicitation material.
Ive been trying to figure out, my colleagues and I, weve put a number of proposals out there
to put visibility into the trading rights of B-1 shares. I dont know what the right formula is; I
know theyre valuable to the people that hold them. I know the idea of membership is valuable to
the exchange and I know that the business has grown up around those fee discounts, so that
management really has very little ability to influence that without affecting the business. So, we
want to find a solution that puts visibility in how we deal with those trading rights long term
that gets the right benefits for the exchange and the customers and the right benefits for the
people that hold them. I dont know that we have the right solution, but at least were trying to
guarantee things or provide visibility or a road map for them, as opposed to just say lets put a
couple of directors up here and theyll work it out in the future. Which I dont, I dont want to
run that kind of business. I like to define things because theres enough going on here without
having to deal with conflicting interests inside a boardroom.
Theres been a lot said privately to try to slam our stock and somehow, ICEs stock has a
premium built in it because somebody else is going to take us over. I would tell you, you should
look at our P/E ratio, what the street has upped that, what they have all the other exchanges at.
ICE has oddly been the fastest growing derivatives exchange for quite a while now, but yet, we do
not have the highest P/E, which we should. Our P/E is similar to your P/E and all the other P/Es
of the US commodity exchanges, with frankly, NYMEX at a premium. And so, I dont see that, when I
look at our numbers I dont see a take over premium in ICE stock and I think thats a misnomer but
if you were to believe that, then you also have to say that the synergies of merger with the CME
should be built into your stock and I dont believe that thats there either. Because people are
saying, analysts and others are saying that, or intimating that once youve got DOJ approval, you
should go well into the 600 range and you didnt. And I actually, because Ive never traded and I
only run a market, I actually believe in markets. I think the markets are efficient and certainly
in the long-term theyre efficient and so, weve been at this long enough now, merger economics
should be built into these stocks and so, I just dont buy the fact that somehow the market doesnt
see the same dynamics that were all seeing about whats going on in this deal.
I will say to you that I, and I mentioned to you and I dont, you know, I grew up in the
mid-West here like a lot of you guys and I dont like to talk about money, but Im a big
shareholder of ICE and my management, we own 5% of the company. We have real stock that we own
that we would be bringing to this deal and I think its a good trade. Id put my own money behind
it and a lot of money, compared to your management and CME management, that are minor holders in
the scheme of things, of stock and you guys trade and you know what its like to have a position on
and have skin in the game, and I would not be here advocating doing this deal if I thought it was a
stupid deal for ICE or that somehow it was going to be catastrophic and destroy my company. Im
sitting on a lot of stock, as are my colleagues here that are working on this deal, and we think
its a great merger and we
think it would be better together than us apart and thats why were doing it. And I dont
know how to try to overcome some of this rhetoric thats out there, other than by saying Im
putting my own money at risk and I hope that you all who do that every day for a living, appreciate
what that means.
I think youve had an opportunity, for those of you that have watched in this merger, youve
seen what ICE has done and the performance of my management team. I think I have the best
management team in the industry. I think my guys are hungry and aggressive and they deliver. We
like to be the company that under promises and over delivers and thats what, you know, makes us
get up in the morning. Youve seen us in the course of this deal. Weve done a deal with NGX
Exchange in Canada; Platts; a company called NGI in the natural gas business;
weve acquired the Winnipeg Exchange; weve taken the Russell indices and these are major
transactions that youve seen just in the course of watching us and I suspect most of you didnt
know much about us until we entered your merger process. But these are the everyday things that we
do when we are aggressively building growth in an era where theres this transformation of the
commodities business and were all staking out our ground and I am definitely incented by staking
out, you know, a big footprint and Im surrounded by a management team thats been able to not only
do that, but effectively integrate these things and deliver them to the bottom line.
So, I would hope that you would think about us running this combined business and what we
might do for you in trying to unlock value around the Board of Trade. Ive said before, I dont
think well do anything to your bonds and aggs that you arent already doing yourself. But, what I
do think we can do is bring the rest of the interest rate complex to the Board of Trade, which is
largely a big OTC market and I also think we can bring the OTC markets in aggs into the Board of
Trade. We can clear them and we can provide new revenue and trading opportunities for people and
new opportunities for the up CMs to clear
and thats been the story of ICE since weve been out there and I think if you follow us,
youll see that we have that track record.
Every other exchange is now talking about the OTC business with big plans. Your management is
going after credit derivatives; CMEs got credit derivatives. Take a look at CMEs efforts to move
into the OTC credit derivatives market. Im not sure theyve had a bid and an offer on that
screen. They certainly havent had a trade. Yet, you know, weve got essentially half of our
energy business is coming from the OTC markets. Why? Because we understand those markets and we
sell technology, we have great relationships with clearers and dealers, we understand when an
exchange can bring to those markets, we understand where we cant bring value to those markets, and
weve threaded that needle very successfully and I think I would love an opportunity to do that in
the interest rate business and I think we can do that together, more so than apart.
I think, a couple other notes here; there, I asked my staff to create these slides that we
filed and put them on these big boards and I hope youll take the time to look at them. I dont
expect that you guys pulled down every SEC filing. I know you have chat rooms and other things
where people do find this stuff and post it so that some people can see it, but essentially, I
think if you just look at the facts here you can discern whats been going on in this deal, you
know? Again, theres a graph here that shows how your earnings estimates are rising, as with your
business growing fast. And theres a graph here that shows how our share price and your share
price have performed during this period that weve been involved in your merger, versus the CME.
Those are telling graphs and again, if you believe that the market is the market, I think you can
see why Im excited about trying to find a way to get together.
I want to tell you that I think, in closing, youve got a great company. Its a strong
company; Ive got a lot of respect for the company. Ive actually met a lot of you now and others
surrounding your company and I will tell you, everybody has been gracious. I mean,
people have been so kind and warm, even those that dont necessarily like the idea of doing a
deal with ICE, have still come to us with ideas and suggestions on ways that we can improve our
stature with you or our offering to you and I think the value that you all have created, that your
forefathers have created at the Board of Trade is not reflected in the current merger deal. And it
may not even be reflected in the proposal that we have on the table and thats why Im here to talk
to you today, is to find out what are the elements that one can do to improve it. I know what CME
has on the table right now is not representative, in my mind, of your value.
So, I would say to you that, just in closing, I think the CME is not the only partner that you
need to think about having, to the extent that you need a partner. Weve pretty much gotten to the
point now in this process, where there is obviously no vote on an ICE, theres only a vote to not
have a CME proposal and Im asking you all, and Im asking your other shareholders to vote that
down, create an atmosphere where we can talk about how we might work together. And Im open to any
kind of conversations about that and Im obviously open to bring the CBOE into that
process to figure out how all this gets untangled and the value gets split between shareholders.
So with that, let me say thank you.
Forward-Looking Statements - Certain statements in this transcript 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 ICEs 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 ICEs 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 requisite approvals provided for under the Agreement dated
May 30, 2007, as amended on June 11, 2007, by and between ICE and the Chicago Board Options
Exchange (CBOE), and the performance of the obligations under such Agreement; 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 ICEs filings with the Securities and Exchange
Commission (the SEC), including ICEs Annual Report on Form 10-K for the year ended December 31,
2006, as filed with the SEC on February 26, 2007 and ICEs Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007, as filed with the SEC on May 4, 2007.
You should not place undue reliance on forward-looking statements, which speak only as of the date
of this transcript. Except for any obligations to disclose 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 transcript.
Important Information About the Proposed Transaction and Where to Find It:
This material relates to a business combination transaction with CBOT proposed by ICE, which may
become the subject of a registration statement filed with the SEC. This material is not a
substitute for the joint proxy statement/prospectus that CBOT and ICE would file with the SEC if
any agreement is reached or any other documents which ICE may send to stockholders in connection
with the proposed transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND
ALL OTHER RELEVANT DOCUMENTS IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain a free copy of the joint proxy statement/prospectus,
if and when such document becomes available, and related documents filed by ICE or CBOT without
charge at the SECs 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 email@example.com.
ICE has filed a proxy statement in connection with the special meeting of CBOT stockholders
scheduled for July 9, 2007, at which the CBOT stockholders will consider the CBOT merger agreement
with CME and other related matters. CBOT stockholders are strongly advised to read
this proxy statement and other related documents, as they contain important information. Investors
are able to obtain a free copy of the proxy statement with respect to the special meeting without
charge, at the SECs website (http://www.sec.gov). Copies of the proxy statement with respect to
the special meeting 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 firstname.lastname@example.org.
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.
Participants in the Solicitation:
In addition to ICE, the following officers and employees of ICE will also be participants in the
foregoing proxy solicitations: Jeffrey C. Sprecher (Chairman and Chief Executive Officer), David S.
Goone (Senior Vice President, Chief Strategic Officer) and Kelly L. Loeffler (Vice President,
Investor Relations and Corporate Communications).
You can find information about ICE and ICEs directors and executive officers in ICEs Annual
Report on Form 10-K, filed with the SEC on February 26, 2007 and in ICEs proxy statement for its
2007 annual meeting of stockholders, filed with the SEC on March 30, 2007.
Other than 1,000 shares of CBOT Class A Common Stock owned by ICE, neither ICE nor any of the other
participants in either of these proxy solicitations has any interest, direct or indirect, by
securities holdings or otherwise, in CBOT Holdings, Inc. or Chicago Mercantile Exchange Holdings
Inc. None of the participants will receive any special compensation in connection with either of
these proxy solicitations.