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ICE Says It Offers Growth to CBOT, Not Just Cost-Cutting

Friday, 23 Mar 2007 | 3:39 PM ET

Jeffrey Sprecher, chief executive officer of the IntercontinentalExchange, told CNBC’s “Morning Call” that his offer for the Chicago Board of Trade comes with the prospect of solid future growth.

“It’s not a consolidation play with ICE,” he said Friday. “This is a growth story. We’re going to take it into the over-the-counter bonds business and the spot gold business. We want to bring new opportunities.”

The Chicago Mercantile Exchange has offered about $8 billion for the cross-town Board of Trade. IntercontinentalExchange, an electronic futures market also known as ICE, has reportedly made an unsolicited offer valued at about $9.9 billion.

Sprecher said ICE recently acquired the New York Board of Trade and is “putting money and technology in it” to increase the company’s clearing capacity. He said ICE recently acquired the Continental Power Exchange and the International Petroleum Exchange and knows how to fold acquisitions into a coherent whole.

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“We have experience in bringing together trading communities, which is really what exchanges are,” Sprecher said. “It’s the same talent and technique that we hope we can take to the board of trade members and convince them that together we can build the organization and make it grow faster.”

Speaking earlier on CNBC, Craig Donohue, chief executive officer of the Chicago Mercantile Exchange, said he had a “definitive merger agreement” and therefore saw no need to increase his bid.

CBOT Bid
CNBC's bond market reporter Rick Santelli discusses the IntercontinentalExchange (ICE) offer for the Chicago Board of Trade with Jeffrey Sprecher, IntercontinentalExchange CEO

Asked if ICE would up the ante if CME increased its bid, Sprecher said, “We’ve asked the CBOT directors for an opportunity to go in and do more due diligence, look at the books and records, and see if we can find even additional opportunities that would provide value to both our shareholders and the board of trade shareholders. In other words, have a higher bid.”

Sprecher said he was “optimistic” about closing the deal for the Chicago Mercantile Exchange and said his company offered better long-term prospects for the Chicago Board of Trade.

"This is an industry that burgeoning and it’s going global," he said. "I think we can grow the Board of Trade faster than the consolidation play.”

Earlier, CME's Conohue told CNBC that Sprecher couldn't possibly have advance knowledge of how the U.S. Department of Justice might rule on the proposed merger. Asked if the the Justice Department's action were unknown, Sprecher said, "Correct."

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