June 15 (Bloomberg) -- The New York Mercantile Exchange, the world's largest energy market, is exploring a sale to NYSE Euronext, Deutsche Boerse AG or Chicago Mercantile Exchange Holdings Inc., said two people involved in the discussions.

Nymex Holdings Inc. may be valued at $155 a share or $14.3 billion, 11 percent more than yesterday's closing price of $139.80, said one of the people, who asked not to be identified because the talks are confidential. Top Nymex executives have met with their counterparts at the three suitors, the people said. Nymex's board has been informed of the discussions.

Nymex shares climbed almost 6 percent. The stock, dismissed earlier this year by analysts as overvalued, has surged on speculation the company may be sold. Exchanges worldwide are combining in order to offer more products in one place. In April, NYSE Group Inc. bought Euronext NV for $14.6 billion and Frankfurt-based Deutsche Boerse agreed to buy New York-based International Securities Exchange for $2.8 billion.

``What this does is speak to how size is extremely important to being competitive,'' said Mark Williams, a finance professor at Boston University. ``The derivatives market in general has really exploded in part because trade is becoming more global.''

Walter Allwicher, a spokesman for Deutsche Boerse, said the company doesn't comment on speculation. Chicago Mercantile spokesman Allan Schoenberg declined to comment, as did Richard Adamonis of NYSE Euronext, based in New York. Nymex spokeswoman Anu Ahluwalia declined to comment.

Chicago Merger

The Chicago Board of Trade has agreed to sell to its crosstown rival for $10.2 billion and has spurned an unsolicited $11.1 billion offer from Intercontinental Exchange Inc. In January, Atlanta-based Intercontinental, the biggest competitor to Nymex in the trading of benchmark oil and fuel contracts, completed a $1.8 billion purchase of the New York Board of Trade, which trades sugar and cocoa futures.

Bankers have not yet been hired to advise Nymex on the possible sale, the people said. The discussions are likely to accelerate after July 9, when shareholders of the Chicago Board of Trade vote on a proposed acquisition by the Chicago Mercantile Exchange, they said.

Nymex shares have jumped 12 percent this week. They rose $1.9, or 1.4 percent, to $141.73 as of 1:44 p.m. in New York Stock Exchange composite trading. The shares have more than doubled since Nymex Holdings first sold shares to the public in November.

The June 11 decision by U.S. Justice Department antitrust regulators to allow the proposed merger of the Chicago Merc and Chicago Board of Trade helped boost Nymex shares, Williams said.

Government Approval

If the government doesn't object to combining the Chicago exchanges, which together control more than 95 percent of exchange-traded U.S. futures based on interest rates and stock indexes, it probably won't find fault with a sale of the Nymex, Williams said.

As recently as March, Nymex shares carried two ``sell'' ratings and four ``holds,'' and no Wall Street analyst recommended buying. Today the shares carry three ``buy'' ratings, nine ``holds'' and no ``sells,'' according to data compiled by Bloomberg.

Deutsche Boerse shares rose 70 cents to 85.83 euros in Frankfurt. NYSE Euronext fell 49 cents to $80.31 in New York.

Trading Soars

A deal with Nymex would jump-start Deutsche Boerse's U.S. futures trading business after unsuccessfully taking on the Chicago Board of Trade in the Treasury futures market in 2004 and 2005. In October, the company started the U.S. Futures Exchange as a joint venture with London-based Man Group Plc to focus on drawing retail investors into the derivatives market.

Trading in derivatives, financial instruments whose value is based on changes in stocks, government debt, loans, currencies and commodities, has surged in recent years. In the first two months of the year, global futures and options trading increased 11 percent, with U.S. derivatives trading jumping 22 percent, compared with the same period in 2006, according to the Futures Industry Association, a trade group in Washington.

``The best way to expand is generally through an acquisition,'' Jean-Francois Theodore, deputy chief executive officer of NYSE Euronext, told investors last week at a conference in New York.

``It's just a fact of the market that in the derivatives business, it's not so easy to attack an existing franchise and to move liquidity'' to competing contracts, Theodore said.

General Atlantic

Before its initial public offering, Nymex transformed itself from a member-owned organization and sold a 10 percent stake to buyout firm General Atlantic LLC of Greenwich, Connecticut. General Atlantic Chief Executive Officer William Ford serves on the boards of both the Nymex and NYSE Euronext. General Atlantic was the largest holder of Archipelago Holdings Inc., the electronic stock exchange that merged with the New York Stock Exchange to form NYSE Group last year.

A sale of Nymex makes sense for several reasons, said Patrick O'Shaughnessy, an analyst for Morningstar Inc. in Chicago.

``The stock, ever since the IPO, has seemed to be priced with some kind of takeover premium in mind,'' he said. The exchange also has room to grow its revenue, according to O'Shaughnessy. ``It probably hasn't reached its peak profitability because it can take some costs out of its structure,'' he said.

One of Nymex's largest fixed costs is maintaining its floor trading operation, and the building that houses it, in downtown Manhattan.

NYSE's Interest

NYSE Group's purchase of Paris-based Euronext created the first trans-Atlantic equity market and expanded the Big Board's reach into trading futures contracts in Europe for commodities and interest rates through its London-based Liffe market.

NYSE Euronext Chief Executive Officer John Thain said on June 6 that his company may buy a U.S. futures market while expanding its own options trading systems.

``It may be that NYSE feels like it's going to be punished if it doesn't do a deal, so they may be rather aggressive,'' said Craig Pirrong, the director of energy markets for the University of Houston's Global Energy Management Institute.

Deutsche Boerse, operator of the Frankfurt stock exchange, is seeking to create the largest trans-Atlantic derivatives market with its plan to buy the International Securities Exchange, which is based in New York and trades options on individual stocks.

Globex Platform

Nymex trades benchmark crude oil, natural gas and gold contracts on its floor in lower Manhattan and electronically on the Chicago Merc's Globex platform. Nymex agreed last year to list its contracts on Globex after Intercontinental took market share in its U.S. crude oil futures contract.

The lack of its own electronic platform is a chink in Nymex's armor, Pirrong said.

``Nymex is not viable for the long-term as a standalone business, partly because they don't own their own technology,'' he said. A positive for Nymex is that it has a clearinghouse that guarantees all the trades made on the exchange, he said.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net.

Last Updated: June 15, 2007 13:48 EDT