BM&FBovespa Sells CME Stake to Help Fund Attempt to Buy Cetip

  • Cetip rejected second offer from BM&FBovespa last month
  • CME and BM&FBovespa struck 2007 deal to link the two markets

BM&FBovespa SA sold its entire stake in CME Group Inc. to fund its attempt to acquire Cetip SA, Brazil’s largest clearinghouse.

BM&FBovespa, which runs Brazil’s stock and futures markets, sold 13.6 million CME shares on April 7, according to a regulatory filing. The CME shares were worth roughly $1.2 billion. BM&FBovespa didn’t say how much money it raised by selling them. Cetip’s market capitalization is about $3.1 billion. The shares amounted to a 4 percent stake in Chicago-based CME, the world’s biggest exchange operator.

A month ago, Cetip rejected a second takeover bid for 41 reais a share from BM&FBovespa. Its original offer was for 39 reais a share. In a regulatory filing last month, Cetip said that though it rejected the proposal as it was presented by BM&FBovespa, it authorized its financial advisers to start discussing a deal. The clearinghouse said the talks will be confidential and didn’t provide further details.

“The sale of CME’s shares was aimed at getting resources needed to meet the company’s needs in context of the proposal of combining its business with Cetip,” BM&FBovespa said in the April 7 filing.

2007 Deal

CME and BM&FBovespa agreed in 2007 to jointly build an electronic system to trade equity derivatives, cash equities, spot exchange rates and government bonds. As part of the deal, they bought stakes in each other. CME plans to keep its stake in its Brazilian counterpart.

“We retain a 4 percent stake in BVMF and continue to partner together to expand access to both of our products to our respective customer bases,” Anita Liskey, a CME spokeswoman, said in an e-mailed statement, referring to BM&FBovespa by its stock ticker. “Since we entered into our partnership in 2007, our relationship has evolved as we have successfully expanded our respective distribution bases and built international liquidity.”

Edemir Pinto, chief executive officer of BM&FBovespa, resigned from CME’s board, according to the regulatory filing. Charley Carey, a CME board member, will retain his position on the BM&FBovespa board, the filing said.

The CME shares were sold in a block trade priced at $90, with JPMorgan Chase & Co. and Bank of America Corp. acting as managers on the sale, according to Fly on the Wall. CME shares fell 2.9 percent to $89.51 in New York as of 11:03 a.m. New York time.

Before it's here, it's on the Bloomberg Terminal.