INTERCONTINENTAL EXCHANGE, 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 CONFIRMS ITS CURRENT MERGER PROPOSAL AS BINDING
THROUGH JULY 12 TO CBOT BOARD
Offers to Enter Dialogue on Key Value Components
Atlanta, GA (July 3, 2007) IntercontinentalExchange, Inc. (NYSE: ICE) today issued the following
statement regarding the resubmission of its merger proposal to CBOT Holdings (NYSE: BOT):
Today ICE delivered to CBOT Holdings a signed Merger Agreement affirming its existing superior
merger proposal to the Board of Directors of CBOT Holdings. CBOT Holdings may accept ICEs merger
proposal, subject to absence of material changes in the business of CBOT Holdings and certain other
conditions, by countersigning the Merger Agreement and returning it to ICE at any time before 5:00
pm (Central time) on July 12, 2007 if CBOT Holdings stockholders and members reject the CME
transaction and the CME merger agreement is terminated.
ICE remains fully committed to an ICE/CBOT combination. Over the past several months we have
listened to CBOT members and stockholders and tried to address in our proposal a number of their
concerns. We believe that through renewed discussions with the CBOT Holdings Board, however, ICE
may be better able to address these concerns. To that end, we are prepared to enter into a
dialogue with CBOT Holdings so that ICE can present CBOT Holdings stockholders and Chicago Board of
Trade members a transaction that fully addresses the value of the exchange, as well as the unique
components of that value, in addition to the binding proposal we have made today. We stand ready
to engage in discussions regarding an enhanced CBOE exercise rights agreement, as well as other
creative solutions to preserve the value of, and provide liquidity for, B-1 and B-2 memberships,
including a possible tender offer.
The fact remains that since March 15th, ICE has proposed a superior transaction that
has not been matched by CME. We continue to urge CBOT stockholders and members to reject the
inferior CME proposal by voting NO on July 9th, and preserve their opportunity to
evaluate the superior ICE alternative, which has now been offered on a binding basis.
The text of the letter sent today to the CBOT Holdings Board of Directors follows:
July 3, 2007
CBOT Holdings, Inc.
141 West Jackson Boulevard
Chicago, Illinois 60604-2929
||Charles P. Carey
Chairman of the Board of Directors
Larry G. Gerdes
Special Transaction Committee of the Board of Directors
||James P. McMillin
Non-Exercise Right Members Committee
||Bernard W. Dan
Chief Executive Officer
Dear Sirs and Madam,
Consistent with the representations made in our prior correspondence to you and as reflected in our
definitive proxy materials, on behalf of IntercontinentalExchange, Inc. (ICE) and its Board of
Directors, I am pleased to submit a definitive Agreement and Plan of Merger (the Merger
Agreement) executed by ICE providing for the combination of ICE and CBOT Holdings, Inc. (CBOT
Holdings). The Merger Agreement constitutes a binding offer of ICE subject to the terms and
conditions of this letter, and memorializes in binding form the terms of our offer letter of June
As we have said before, we believe that ICEs offer provides CBOT Holdings shareholders with a
clearly superior alternative to a merger with Chicago Mercantile Exchange Holdings, Inc. (CME).
Our proposal reflects an approximately 5.3% premium over the CME merger consideration based on the
share prices of ICE and CME common stock on the New York Stock Exchange as of the close of trading
on July 2, 2007. Our proposal also offers greater certainty and immediate value for the CBOE
exercise rights, and offers specific pricing protections through 2014 for Series B-1 and B-2
members of the Board of Trade of the City of Chicago (CBOT).
As the CBOT Holdings shareholders and CBOT members prepare to vote on the CME merger proposal, ICE
wants to be clear that it stands by its superior proposal and is prepared to enter into a
definitive Merger Agreement with CBOT Holdings as soon as the CME merger agreement is terminated
upon the terms described in this letter. To that end, ICE is providing the Merger Agreement,
executed by ICE, together with this letter as evidence of ICEs commitment to CBOT Holdings and its
shareholders and members.
The Merger Agreement also contains all of the exhibits thereto and a disclosure letter of ICE. If
the CME merger agreement is terminated before 5:00 p.m. Chicago time on July 12, 2007, and if all
of the following conditions are satisfied, the Merger Agreement will be binding on all parties:
||ICE shall have received, prior to 5:00 p.m. (Chicago time) on July 12, 2007,
counterparts of the Merger Agreement fully executed by CBOT Holdings, CBOT and a newly
formed subsidiary of CBOT Holdings (CBOT Sub), together with a disclosure schedule
from CBOT Holdings and CBOT dated as of the date CBOT Holdings and CBOT have returned
to ICE their executed counterparts of the Merger Agreement;
||There shall have occurred no Material Adverse Effect (as defined in the
Merger Agreement) on CBOT Holdings or any events or circumstances that would be
reasonably likely to result in a Material Adverse Effect on CBOT Holdings, in each case
since October 14, 2006;
||From and after and including the date of this letter, CBOT Holdings shall not
have amended or agreed to amend the CME merger agreement and none of CBOT Holdings,
CBOT or CME shall have waived or agreed to waive any rights under the CME merger
agreement in any material respect, or consented to or agreed to consent to any waiver
of the CME merger agreement in any material respect; and
||There shall be no matter disclosed in CBOT Holdings or CBOTs disclosure
schedules for the Merger Agreement that was not disclosed in the CBOT Holdings and CBOT
disclosure letter corresponding to the CME merger agreement, which matter has resulted
in, or would reasonably be likely to result in, a Material Adverse Effect on CBOT
Unless the CME merger agreement is terminated and CBOT Holdings, CBOT and CBOT Sub execute and
deliver to ICE their counterpart to the Merger Agreement before 5:00p.m. (Chicago time) on July 12,
2007, the Merger Agreement shall be null and void regardless of any action or communication of CBOT
Holdings and/or CBOT and ICE shall have no further obligation under this letter or the Merger
ICE acknowledges that CBOT Holdings and its subsidiaries may rely on ICEs foregoing statements if
CBOT Holdings and CBOT have executed and delivered to ICE their counterparts to the Merger
Agreement in accordance with the terms and conditions of this letter, provided that the Merger
Agreement shall not have been previously withdrawn by ICE. Accordingly, ICE agrees that if CBOT
Holdings or any of its subsidiaries commences a suit that results in a judgment against ICE for
failure to comply with its obligations under the Merger Agreement or its foregoing obligation under
this letter, CBOT Holdings and its subsidiaries shall be entitled to temporary and/or permanent
injunctive relief to enforce such provisions, to the extent granted by a court of competent
jurisdiction, without the necessity of proving the inadequacy of money damages.
The foregoing obligations of ICE under this letter shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance with the law of the
state of Delaware without regard to its rules of conflicts of laws.
Potential Enhancements to ICEs Proposal
In the course of discussions we have had with CBOT members during the past several months, we have
come to learn a great deal about their concerns. Although we have tried to address a
number of these concerns in our proposal, we believe that you and we may be able to better address
a number of these concerns through renewed dialogue and information-sharing. Notwithstanding that
we have submitted to you an executed Merger Agreement, we are prepared to enter into such a
dialogue with you at any time while you are considering our proposal or, if you prefer, as an
alternative to our proposal. We would envision such dialogue including the following issues:
(1) Preserving the Value of B-1 and B-2 Memberships and Providing Liquidity to Members. Many CBOT
members have voiced concerns regarding what the value of their B-1 and B-2 memberships may be in
several years and whether there would be sufficient liquidity in the market for those memberships
to permit them to sell their memberships for fair value. ICE is prepared to consider and discuss
with you alternatives such as engaging in a tender offer for B-1 and B-2 memberships in an effort
to address this issue.
(2) Alternative Integration Plan. We remain convinced that we can successfully migrate the CBOT
electronic trading platform and clearing onto ICE systems within the time periods and parameters we
have previously indicated. The rhetoric from both the CME and the CBOT board have understandably
concerned many CBOT members, however. In order to remove this as an obstacle to a fair
consideration of our superior proposal, ICE is prepared to offer you an alternative integration
plan that addresses your concern about integration risk. ICE currently licenses from Atos Euronext
Market Solutions (AEMS), on favorable terms, its Trade Registration System (TRS) front-end
clearing system, and ICE is in process of extending its relationship with AEMS to include its CPS
clearing software (which is currently used to clear the business of ICE Futures, the ICE OTC
cleared markets and Euronext Liffe). Although we would still intend to eventually migrate CBOT
trading and clearing onto ICE platforms, we believe that we can use these proven systems to
eliminate any perceived gaps in our proposed integration plan. We believe that CBOT and ICE should
together explore this alternative with AEMS, and we are prepared to cooperate with CBOT to
investigate this alternative expeditiously.
(3) Protecting CBOE Exercise Rights. Although we continue to believe our proposed solution to the
CBOE exercise rights is superior to the CMEs proposal, in which any value is predicated on the
outcome of potentially lengthy, distracting, expensive and inherently uncertain litigation, we have
heard from CBOT members a desire to provide additional value to Full Members and ease their
ability to realize the consideration for the exercise rights. In the event the CME transaction is
voted down by CBOT members or CBOT Holdings stockholders, we are prepared to commit ourselves to
enhancing the terms of our exercise right proposal to address members concerns. In addition, we
would also be willing to set the record date for determining eligibility for Full Members to
receive consideration pursuant to the CBOE settlement agreement at an early date following our
entering into an agreement to combine our companies. In this way, Full Members can qualify for
the consideration in the exercise right settlement prior to the closing of the transaction, giving
them the flexibility to divest their CBOT Class A stockholdings prior to the closing of our merger
We look forward to hearing from you.
Jeffrey C. Sprecher
Chairman & Chief Executive Office
More information about the ICE proposal is available on the ICE website at www.theice.com under
About ICE/Investor Relations and at www.theicecbot.com.
IntercontinentalExchange® (NYSE: ICE) operates the leading global, electronic
marketplace for trading both futures and OTC energy contracts and the leading soft commodity
exchange. ICEs markets offer access to a range of contracts based on crude oil and refined
products, natural gas, power and emissions, as well as agricultural commodities including cocoa,
coffee, cotton, ethanol, orange juice, wood pulp and sugar, in addition to currency and index
futures and options. ICE® conducts its energy futures markets through its U.K. regulated
London-based subsidiary, ICE Futures, Europes leading energy exchange. ICE Futures offers liquid
markets in the worlds leading oil benchmarks, Brent Crude futures and West Texas Intermediate
(WTI) Crude futures, trading nearly half of the worlds global crude futures by volume of commodity
traded. ICE conducts its agricultural commodity futures and options markets through its U.S.
regulated subsidiary, the New York Board of Trade®. For more than a century, the
NYBOT® has provided global markets for food, fiber and financial products. ICE was
added to the Russell 1000® Index on June 30, 2006. Headquartered in Atlanta, ICE also
has offices in Calgary, Chicago, Houston, London, New York and Singapore. For more information,
please visit www.theice.com and www.nybot.com.
Forward-Looking Statements - Certain statements in this press release 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 press release. 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 press release.
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.
VP, Investor Relations and Corporate Communications
Sard Verbinnen & Co
Jim Barron/Kara Findlay
Crystal Clear Communications
Ellen G. Resnick
(773) 929-9292; (312) 399-9295 (c)