CME Group, parent company of the world's largest derivatives exchange, said its board has authorized a $1.1 billion share buyback and a special dividend of $5 per share.
One analyst said the moves are designed to shore up
CME's stock price and smooth the way for its purchase of energy and metals exchange Nymex Holdings.
The value of the Nymex deal has fallen from $11 billion to $9 billion since January as CME shares have tumbled. The deal calls for Nymex shareholders to receive 0.1323 CME share and $36 cash for each Nymex share.
The decline in CME shares has led dissident Nymex members and shareholders to threaten to scuttle the deal if CME does not sweeten its bid.
Edward Ditmire, an analyst with Fox-Pitt, Kelton, said of CME's special dividend, "It's a way to make the Nymex deal more attractive without having to explicitly raise its offer. The dividend is a reward for voting for the deal."
The Nymex deal must be approved by Nymex members and shareholders and the Securities Exchange Commission.
The special dividend will be paid after CME's acquisition of Nymex closes, expected in the fourth quarter. The stock repurchase will take place over a period of 18 months, subject to market conditions.
CME said it will incur up to $4 billion of debt to make the Nymex purchase and buy back the stock, an amount Ditmire said the cash-rich exchange could easily afford.
CME last year completed a $12 billion acquisition of the Chicago Board of Trade.
"With the completion of the merger with CBOT and the pending acquisition of Nymex, our need to significantly build cash balances has changed," said CME Chief Executive Craig Donohue.
CME shares are down more than 37 percent this year, underperforming the KBW Capital Markets index, which includes exchanges and has fallen 27 percent.