CME Group Inc. (NYSE: CME) and Nymex Holdings Inc. (NYSE: NMX) confirmed rumorsthat the two companies are engaged in preliminary discussions regarding a potential deal worth an estimated $11.3 billion. The deal would create the largest derivatives and over-the-counter exchange market in the world. CME is reportedly ready to offer Nymex shareholders $36 in cash and 0.1323 of a share of CME stock in exchange for each share of Nymex, which would value Nymex shares at around $119.22 a piece. The companies were also quick to note that the deal is stil in the early stages and the terms and price could be subject to materially change.

The move follows countless other mergers and acquisitions of exchanges around the world making a bid to expand their offerings and become more internationally exposed. The CME Group itself is composed of a recent merger between the Chicago Board of Trade (CBOT) and the Chicago Merchentile Exchange (CME). Other acquisitions include the NYSE’s recent purchase of EuroNext and the Nasdaq’s acquisition of OMX. The new NYSE Euronext combo is also now in a deal to purchase the American Stock Exchange. Rumors have also surfaced of potential acquisitions of other smaller futures, options, and derivatives exchanges like IntercontinentalExchange.

The CME Group is the world’s largest derivatives trading organization that enables investors to bet on anything from interest rates to corn by trading contracts whose value derives from the price of the underlying commodity or event. Meanwhile, the Nymex is well known as being the largest exchange for energy and metal trading. Notably, the Nymex has already partnered with the CME and listed several of its contracts on the CME’s electronic exchange. This move is considered to be great for the Nymex because it had been struggling with the idea of an electronic platform, losing market share to companies like the IntercontinentalExchange. Now, the Nymex would be able to utilize the CME’s technology to adapt itself to the new electronic trading environment.

In the end, this is great news for shareholders of both companies as the combination would create a much stronger company. The Nymex exchange would likely see substantial improvement due to electronic trading while the cME will establish itself as an even more dominant player in the exchanges sector. The industry is now one in which M&A is taking place at an increasingly rapid pace, and this deal should also help prop up the value of firms that are still strong an independent like ICE. Combined, these are all stocks worth watching in today’s environment!

Related Companies
IntercontinentalExchange Inc. (ICE)
Nasdaq Stock Market (NDAQ)
NYSE Euronext (NYX)