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ICE Reaches Pact with Chicago Options Exchange to Help CBOT Bid

IntercontinentalExchange said it had enhanced its bid for CBOT Holdings by reaching an agreement that might resolve that company's dispute with the Chicago Board Options Exchange.

ICE, an upstart energy exchange, is vying with Chicago Mercantile Holdings , the largest U.S. futures mart, to buy the parent of Chicago Board of Trade.

CBOT has been battling with the CBOE over exercise rights that date back to the creation of the options exchange by CBOT in 1973. The rights allow CBOT full members to trade options at the neighboring CBOE without having to buy a membership.

CBOE has requested that these rights be terminated if CBOT is taken over. CBOT has vowed to protect the rights.

ICE and CBOE would offer to settle the dispute by paying the CBOT members in question $500,000 each for each right, or up to $665.5 million in aggregate, according to the agreement. Consideration would be paid equally by CBOE and ICE, in cash or securities, and is contingent on ICE and CBOT merging.

"Unlike the acquisition of CBOT proposed by CME Holdings, which provides no value for the exercise right eligibility of CBOT members, and no certain resolution to this critical issue, the ICE-CBOE proposal would provide CBOT full members with immediate value for their exercise rights," ICE said in a statement.

CBOT's board on May 11 endorsed terms of a sweetened offer from CME. That offer valued CBOT at about $9.2 billion, or 16% higher than CME's original proposal made in October.

Atlanta-based ICE announced its rival plan for CBOT in mid-March, throwing a wrench into the works of the plan to create the world's largest derivatives exchange.