This morning CME confirmed talks to buyout NMX at around $119/share. ICE gapped up premarket in sympathy up to 154 or so. It's currently trading at $140. There is fear that:
1. since CME is working with NMX, there won't be an acquisition of ICE by CME.
2. CME and NMX poses a competitive threat to ICE.
My theory continues that ICE will be acquired by another player sometime this year (once we get some credit stability). NYX or even a foreign exchange could be a likely acquirer. ICE is still the better exchange, in my opinion. Don't trust everything you see. I've gone long a few shares of ICE at 140.89, but there is a lot of risk in this trade, as obviously someone wants ICE lower it seems.
In addition, an additional risk is to note that the buyout terms are:
$36 in cash, and .1323 shares of CME/share of NMX
The market may also be reacting negatively due to the share portion of the buyout. Most shareholders obviously want cash for the transaction, but in this credit environment, this is going to be rare/nonexistent. The realization of this truth is also dampening ICE, as I suspect a good portion of the stock's valuation was based upon investors betting on a majority cash buyout.
In other words, be careful.
Subscribe to:
Post Comments (Atom)
2 comments:
Do you feel it may be safe to play some of the solar stocks long?
I'm a long term bull on the solars, and any play is safe as long as you manage your risk/have an exit strategy. Keep in mind the entire market is going to be more volatile than usual over the near term.
Post a Comment