Like its mainstay canola contract, the Winnipeg Commodity Exchange’s price has leapt upward.
An unnamed company has offered $50 million for the WCE, which is 25 percent more than the $40 million deal announced recently with the Intercontinental Exchange (ICE).
If WCE rejects the ICE bid, it will have to pay a $1.2 million fee. ICE appears to have a right of first refusal on other bids.
“(The WCE) is permitted under its arrangement agreement with ICE to accept a superior proposal if ICE fails to match same,” said a WCE News release
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Bloomberg news service has identified the New York Mercantile Exchange (Nymex) as the new bidder.
But some traders have speculated that the logical bidder would be the Chicago Mercantile Exchange (CME), following its successful conquest of the Chicago Board of Trade. That deal, for $12 billion US, dwarfs the WCE bids.
The CME will now control the CBOT’s market dominating agricultural contracts, so the WCE’s contracts would be a good addition, some say.
But the WCE also makes sense for Nymex, which specializes in energy contracts. While Winnipeg does not now have any energy contracts, as a licensed exchange in Canada it could easily launch futures for oilsands petroleum products and natural gas, some speculate. The advantage for a bigger player taking over Winnipeg is that it would not have to build a Canadian derivatives exchange from the ground up.
Strict rules from securities commissions make it arduous to set up a new exchange.
A wave of takeovers has washed over derivative exchanges around the world. ICE bought the New York Board of Trade, which hosts sugar, coffee, cocoa and frozen concentrated orange juice contracts, for $1.8 billion in January. The CME has just won the CBOT.
Nymex has arranged to buy 10 percent of the Montreal Exchange.
