Bloomberg News

CBOE Eight-Day Rally Sends Stock to Record on Merger Speculation

February 14, 2013

CBOE Holdings Inc. (CBOE:US), the largest U.S. options market by volume, rose for an eighth day and for the 29th time in 33 sessions amid speculation takeovers will accelerate the 12 percent rally in exchanges this year.

Shares of the Chicago-based company gained 2 percent to a record $35.69 today. The stock is up 21 percent this year, compared with a 12 percent advance for the Bloomberg World Exchanges Index, which includes CBOE and 24 of its peers.

“CBOE is a relatively small exchange in terms of market capitalization, so it’s quite possible” that it could be taken over, Ed Ditmire, a New York-based analyst at Macquarie Group Ltd., said in a phone interview. “There seems to be more deals in the air.”

Companies that operate securities markets have been the subject of $50 billion in attempted takeovers since 2010 amid shrinking profits for stock trading. Intercontinental Exchange Inc. agreed in December to buy NYSE Euronext, the owner of the largest American equity exchange, in a $8.2 billion deal. Nasdaq OMX Group Inc. held preliminary talks with Carlyle Group LP about going private, a person with direct knowledge of the matter said on Feb. 11. CBOE is the smallest publicly traded U.S. exchange with a market value of $3.1 billion.

Gail Osten, a spokeswoman for CBOE, declined to comment on whether the company may be acquired.

The stock-market rally is also boosting CBOE’s price, Ditmire said. The Standard & Poor’s 500 Index has climbed 6.7 percent in 2013, bringing it within 3 percent of an all-time high. U.S. stock mutual funds received $5.77 billion in deposits last week as investors returned to equities, the Investment Company Institute in Washington said yesterday.

‘Terrific Spot’

“We’re in a terrific spot right now,” Ed Tilly, CBOE president and chief operating officer, said today at the Credit Suisse Financial Services Forum in Miami. “We’re finding ourselves getting into nice rhythm as a public company.”

Tilly said the company would evaluate going private if it would boost value for shareholders.

Executives at CBOE told directors on Feb. 8, 2011, that they are open to strategic partnerships, a person with direct knowledge of the discussion said. A buyer would get a company with exclusive rights to options on the S&P 500 and Chicago Board Options Exchange Volatility Index, or VIX.

CBOE has beaten earnings estimates (CBOE:US) 10 of 11 quarters since going public in June 2010. Net income increased 25 percent in the fourth quarter as revenue from transactions increased, the company said in a statement Feb. 8.

Total volume in futures on the CBOE’s Volatility Index, known as the VIX, rose 98 percent to a record 23.79 million in 2012, according to the CBOE Futures Exchange.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • CBOE
    (CBOE Holdings Inc)
    • $48.74 USD
    • -0.47
    • -0.96%
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