The New York Mercantile Exchange (NYMEX), the world's largest energy market, is exploring a sale for about $14.3 billion, a news agency reported on Friday, as exchanges worldwide hustle for the best merger partners.
Top NYMEX executives have met their counterparts at three suitors -- NYSE Euronext, Deutsche Boerse AG and Chicago Mercantile Exchange Holdings Inc. -- according to the report on the Web site of news agency Bloomberg.
Banks have not yet been hired to advise the company on the sale, the report said. A NYMEX response is not mentioned in the report, which cited two people involved in the discussions.
Buying NYMEX would allow a traditional cash equities exchange to add products such as energy derivatives to the trading mix it can offer its clients. It trades contracts including crude oil, heating oil and gasoline futures.
Exchanges have for some years been consolidating internationally as they seek to cut costs and broaden their product range, in an effort to keep up with the expanding presence of their clients.
New York-based Nasdaq Stock Market Inc holds more than 30 percent of the London Stock Exchange after an unsuccessful takeover attempt, and last month agreed to buy Nordic exchange OMX for $3.7 billion as it expands beyond the United States.
Meanwhile Frankfurt-based Deutsche Boerse in April agreed to buy U.S. options market the International Securities Exchange (ISE) for $2.8 billion, after NYSE Group Inc. pipped it to buying pan-European bourse Euronext last year.
Some Boerse shareholders including second-biggest investor, U.S. hedge fund Atticus Capital, have however already criticized the ISE transaction, saying they would rather Boerse continue its program of returning excess cash to shareholders in the form of more stock buybacks and higher dividends.
The fact such shareholders derailed Deutscher Boerse's attempts to buy the London Stock Exchange, in a confrontation that ended with the early departure of then-CEO Werner Seifert in spring 2005, may make it less likely the Boerse will now proceed with another big U.S. deal such as acquisition of NYMEX.
An expanding geographical presence is not the only trend pushing exchange consolidation.
The Chicago Mercantile Exchange is locked in a takeover battle with IntercontinentalExchange Inc. for its local rival, the Chicago Board of Trade, as it seeks cost cuts to pass on to its clients.
And several Asian bourses such as the Tokyo Stock Exchange and the Korea Exchange have started working more closely together to allow cross-listings by companies.
A spokeswoman for NYMEX did not immediately respond to a call and e-mail seeking comment on the Bloomberg report. A spokeswoman for NYSE Euronext in France had no comment, nor did Deutsche Boerse. The CME did not immediately return a call seeking comment.