Nymex shares surge to record on talk it is sounding out buyers
Saturday, 16 June 2007
Print
Email
Shares in the New York Mercantile Exchange (Nymex), the historic home of oil trading on Wall Street, surged to a record high amid reports that the company is shopping around for potential buyers. Nymex managers are understood to be sounding out their opposite numbers at the Chicago Mercantile Exchange (CME) in the US, Deutsche Börse in Europe and the transatlantic NYSE Euronext, with a view to taking part in the wave of consolidation sweeping global exchanges.
It is less than a year since Nymex went public in one of the hottest flotations of 2006, when the share price doubled on its first day's trading. Valued at $5.1bn on its debut last November, the company is understood to have a set a price tag of about $14.3bn for any sale.
Regulatory approval of the putative merger of the CME and the Chicago Board of Trade (CBOT) earlier this week, allowing the creation of the world's biggest derivatives exchange, cleared up doubts about whether Nymex could also take part in consolidation.
And then an overnight report suggested that Nymex has been sounding out potential acquirers over the past few days. The stock jumped 6 per cent in early trading and was up 2.5 per cent at $143 around lunchtime.
The exchange was created by dairy merchants in 1872 as a place to trade butter and cheese; it changed its name to the New York Mercantile Exchange a decade later. Today, its open-outcry trading floor accounts for two-thirds of global trading in energy futures and options.
One Wall Street analyst who follows the exchanges sector said a sale was highly likely and that the most likely winner of any auction would be NYSE Euronext - which owns the New York Stock Exchange, the pan-European Euronext and the London-based futures exchange Liffe.
"Why sell so soon after floating? They can get a premium valuation at this point," he said. "They are a hot commodity because there are so few of these derivatives exchanges left, and bidders can get some big synergies from a combination, particularly NYSE Euronext. There are synergies for the NYSE on the clearing side of the business and Nymex's electronic trading can be switched from the CME's platform to Euronext's. It makes too much sense for them not to consider it."
Analysts are expecting Nymex's net income to rise by two-thirds to about $250m this year, thanks to ballooning futures and options trading.
