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On Wednesday 19th, the Financial Times reported that CME, a futures exchange platform, made a $16 billion bid to take over its Chicago rival Cboe exchange. However, shortly afterward, CME came out and flatly denied the rumors. This news had a very significant impact on the market prices of each of the company’s stocks.
CME Rumored to Bid for Cboe
According to the financial times’ news outlet, CME had put a bid earlier on Wednesday planning to take over the control of the exchange. The news release stated that CME had offered about $16 billion for the take-over by purchasing all the equity. In addition, CME had offered 0.75 of its share for each Cboe share, a move which would mean the purchase value would be $150, 20% higher than the prevailing values.
Chicago is the home for both exchanges, but each offers a different class of investment asset. For instance, CME is highly acclaimed as the world’s most extensive futures trading network.
Cboe, on the other hand, owns a unique class of assets, Vix Indices, and Contracts. Apart from that, Cboe also has a massive investment in stock trading, owning three exchanges. Thus, if the CME platform acquired the Cboe, that would open its businesses to a whole new and broader level.
CME would be able to diversify into other sectors like oil, offering contract options in such industries. This would be one of the most significant acquisitions of CME, but was it happening?
CME Denies The Rumours
Soon after the reports began circulating, CME publicly denied the speculations. Earlier, the financial times suggested that three parties were aware of the CME-Cboe deal. However, CME’s release thoroughly quashed the claims, in fact calling them rumors. The short release reads;
“CME Group denies all rumors that [it] is in talks to acquire Cboe Global Markets… The company has not had any discussions with Cboe whatsoever. While the company does not typically comment on rumors or speculation, today’s inaccurate information required correction.”
Although Cboe stayed silent for some time, they later sent a statement to FOX Business. Their spokeswoman noted that Cboe doesn’t respond to speculative information and rumors. However, it’s known that words of such magnitude can have dire consequences in the markets. Therefore, the public denial of the same by both companies was necessary.
The Rumor Impacted The Markets
The two news releases have had a high impact on the markets since yesterday. As the deal was to buy the shares at nearly $150, the prices of Cboe shares began surging to as high as $139, a 12% increase from the price earlier. However, the stock later dipped to about $122.73, which was a $1.38 loss.
CME stocks began by tanking, especially after the first news started circulating. Although it recovered, it still closed the day at $197.58, $7 below the market value earlier in the day.