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CME Sweetens CBOT Bid

The move sends CBOT shares higher.
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Chicago Mercantile Exchange (CME) - Get CME Group Inc. Class A Report boosted its bid for the Chicago Board of Trade (BOT) , saying it would buy back $3.5 billion worth of the combined companies' shares after their merger closes.

The CME also boosted the amount of stock that CBOT holders will get in the deal, though the new terms still appear substantially below the trading price of CBOT shares. CBOT's board nonetheless said the offer is superior to March's unsolicited all-stock bid from

InterContinental Exchange

(ICE) - Get Intercontinental Exchange, Inc. (ICE) Report

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CME said CBOT shareholders will get 0.35 CME shares for each CBOT share outstanding. That values the deal at around $175 a CBOT share -- some 10% below its recent trading price of $194.

CBOT Holdings shareholders will own 34.6% of the outstanding shares of the combined company, up from 31.2% in the original agreement.

CME said the buyback will take place at $560 a share -- a sharp premium to the stock's recent $497 range.

"The Board and Management of CME and CBOT recognize the tremendous potential for value creation in a merger of our two companies," said CME Executive Chairman Terry Duffy. "We believe there is strong support for the combination from shareholders and members of both companies, and these revised terms and the cash tender offer makes our already compelling transaction even more attractive. Since we announced the original agreement last October, both CME and CBOT have delivered strong financial performance and volume growth, underscoring the strategic rationale for bringing these two great Chicago institutions together. We look forward to completing this merger and realizing the full benefits for customers and shareholders of both companies."

CBOT shares rose $3 early Friday to $197.