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As filed with the Securities and Exchange Commission on June 10, 2008.

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

CME GROUP INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		6200		36-4459170
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

20 South Wacker Drive

Chicago, Illinois 60606

(312) 930-1000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Kathleen M. Cronin

Managing Director, General Counsel and Corporate Secretary

CME Group Inc.

20 South Wacker Drive

Chicago, Illinois 60606

(312) 930-1000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Rodd M. Schreiber, Esq. Susan S. Hassan, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Chicago, Illinois 60606 (312) 407-0700		Christopher K. Bowen General Counsel and Chief Administrative Officer Richard Kerschner General Counsel NYMEX Holdings, Inc. New York Mercantile Exchange, Inc. One North End Avenue World Financial Center New York, New York 10282 (212) 299-2000		Howard Chatzinoff, Esq. Michael J. Aiello, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000

 

 

Approximate date of commencement of proposed sale to the public: as soon as practicable following the effectiveness of this registration statement, satisfaction or waiver of the other conditions to closing of the merger described herein and consummation of the merger.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  x						Accelerated filer  ¨
Non-accelerated filer  ¨    (Do not check if a smaller reporting company)						Smaller reporting company  ¨

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CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered		Amount to be registered (1)		Proposed maximum offering price per unit		Proposed maximum aggregate offering price (2)		Amount of registration fee (3)
Class A Common Stock, par value $0.01 per share		13,064,599		N/A		$4,620,503,142		$181,586

(1)

The maximum number of shares of CME Group Inc. (“CME Group”) Class A common stock estimated to be issuable upon the completion of the merger described herein, calculated as the product of: (A) 98,749,800 and (B) 0.1323, representing the maximum stock consideration per share of NYMEX Holdings, Inc. (“NYMEX Holdings”) common stock. This number is based on the number of shares of NYMEX Holdings common stock outstanding, or reserved for issuance under various plans, as of June 6, 2008, and the exchange of each share of NYMEX Holdings common stock and share of NYMEX Holdings common stock reserved for issuance under various plans, for shares of CME Group Class A common stock pursuant to the formula set forth in the Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group, CMEG NY Inc., NYMEX Holdings and New York Mercantile Exchange, Inc. Includes rights to acquire Series A Junior Participating Preferred Stock pursuant to CME Group’s rights agreement.

(2)

Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act, and calculated pursuant to Rules 457(c) and 457(f) under the Securities Act. The proposed maximum aggregate offering price, calculated based upon the market value of shares of NYMEX Holdings common stock (the securities to be exchanged in the merger) in accordance with Rule 457(c) under the Securities Act, is $4,620,503,142, which is the difference between (a) the product of (i) the average high and low prices of NYMEX Holdings common stock of $82.79, as reported on the New York Stock Exchange on June 4, 2008, and (ii) 98,749,800, the maximum total number of shares of NYMEX Holdings common stock to be exchanged in the merger, less (b) the mandatory amount of cash to be paid by CME Group in exchange for NYMEX Holdings common stock, $3,554,992,800.

(3)	Calculated by multiplying the estimated aggregate offering price of securities by 0.00003930.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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The information in this document is not complete and may be changed. We may not sell the securities offered by this document until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED JUNE 10, 2008

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders and NYMEX Class A Members:

The boards of directors of CME Group Inc., or “CME Group,” and NYMEX Holdings, Inc., or “NYMEX Holdings,” the parent company of New York Mercantile Exchange, Inc., or “NYMEX,” have approved a merger agreement pursuant to which NYMEX Holdings will merge with and into CMEG NY Inc., a wholly-owned subsidiary of CME Group.

If the merger is completed, NYMEX Holdings stockholders will receive for each issued and outstanding share of NYMEX Holdings common stock they own, at the election of each NYMEX Holdings stockholder and subject to proration as described below, consideration in the form of CME Group Class A common stock or cash.

The cash consideration per share of NYMEX Holdings common stock for which a valid cash election has been made will be equal to the sum of (a) $36.00 plus (b) the product of (1) 0.1323 and (2) the average closing sale price of CME Group Class A common stock on the New York Stock Exchange LLC, or the “NYSE,” for the period of ten consecutive trading days ending on the second full trading day prior to the effective time of the merger. We call this average the “Average CME Group Share Price.” The stock consideration per share of NYMEX Holdings common stock for which a valid stock election has been made will be the number of shares of CME Group Class A common stock equal to the cash consideration per share divided by the Average CME Group Share Price.

The aggregate consideration to be paid in the merger is subject to an approximately $3.4 billion mandatory cash component. In the event the aggregate cash consideration is undersubscribed, NYMEX Holdings stockholders who elected to receive stock consideration in the merger will receive a portion of their consideration in cash. In the event the aggregate cash consideration is oversubscribed, CME Group has the option to increase the aggregate cash consideration above the mandatory cash component, subject to certain limitations, and/or provide a portion of the consideration payable to NYMEX Holdings stockholders who elected to receive cash consideration in the merger in the form of CME Group Class A common stock. Assuming CME Group does not increase the mandatory cash component, the aggregate number of shares of CME Group Class A common stock to be issued by CME Group in the merger is estimated to be 12.5 million shares and the aggregate amount of cash to be paid by CME Group in the merger is estimated to be $3.4 billion.

Based on the number of shares of common stock of CME Group and NYMEX Holdings outstanding on March 14, 2008, the last trading day prior to the public announcement of the execution of the merger agreement among our companies, and assuming that CME Group does not exercise its option to increase the mandatory cash component, immediately after the completion of the merger, those who were CME Group stockholders immediately prior to the merger will own approximately 81.4% of the CME Group Class A common stock and those who were NYMEX Holdings stockholders immediately prior to the merger will own approximately 18.6% of the CME Group Class A common stock.

In connection with the merger, NYMEX is offering to purchase all of the 816 outstanding NYMEX Class A memberships for $612,000 per NYMEX Class A membership. The closing of the merger is conditioned on, among other things, at least 75% of the NYMEX Class A memberships being sold to NYMEX. The merger is also conditioned on the approval by NYMEX Class A members of changes to the certificate of incorporation and bylaws of NYMEX that eliminate substantially all of the rights of NYMEX Class A members currently contained in the certificate of incorporation and bylaws of NYMEX. This joint proxy statement/prospectus is not an offer to purchase any NYMEX Class A membership. An offer to purchase the NYMEX Class A memberships is being made only pursuant to the membership purchase offer documents that are being sent to NYMEX Class A members under separate cover. If you hold a NYMEX Class A membership, you should refer to the membership purchase offer documents for important information and instructions on how to complete and return your membership purchase offer documents.

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CME Group will hold a special meeting of its stockholders to consider and vote on the amendment and restatement of the certificate of incorporation of CME Group and the issuance of CME Group Class A common stock required in connection with the merger. NYMEX Holdings will hold a special meeting of its stockholders to consider and vote on the adoption of the merger agreement. NYMEX will hold a special meeting of the NYMEX Class A members to consider and vote on the amendments to the certificate of incorporation and bylaws of NYMEX required in connection with the merger.

Every vote is important. Whether or not you plan to attend your company’s special meeting, please take the time to vote by following the instructions on your proxy card.

The places, dates and times of the special meetings of stockholders and NYMEX Class A members, as applicable, are as follows:

 

For CME Group stockholders: [Address] [Address] Chicago, Illinois [Date] [Time]		For NYMEX Holdings stockholders: [Address] [Address] New York, New York [Date] [Time]		For NYMEX Class A members: [Address] [Address] New York, New York [Date] [Time]

The CME Group board of directors recommends that CME Group stockholders vote “FOR” the proposals to approve the amendment and restatement of the certificate of incorporation of CME Group and the issuance of CME Group Class A common stock in the merger.

The NYMEX Holdings board of directors unanimously recommends that NYMEX Holdings stockholders vote “FOR” the proposal to adopt the merger agreement.

We enthusiastically support this combination of our companies and join with our boards in recommending that our stockholders vote “FOR” the proposals necessary to complete the merger.

 

Sincerely,		Sincerely,
Terrence A. Duffy		Richard M. Schaeffer
Executive Chairman CME Group Inc.		Executive Chairman NYMEX Holdings, Inc. New York Mercantile Exchange, Inc.

For a discussion of risk factors that you should consider in evaluating the merger and the other matters on which you are being asked to vote, see “ Risk Factors” beginning on page 32.

CME Group Class A common stock trades on the NYSE and the Nasdaq Global Select Market, or the “Nasdaq,” under the symbol “CME,” and NYMEX Holdings common stock trades on the NYSE under the symbol “NMX.”

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of the merger and the other transactions described in this joint proxy statement/prospectus nor have they approved or disapproved of the issuance of the CME Group Class A common stock to be issued in connection with the merger, or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [            ], 2008, and is being first mailed to CME Group stockholders, NYMEX Holdings stockholders and NYMEX Class A members on or about [            ], 2008.

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CERTAIN FREQUENTLY USED TERMS

This joint proxy statement/prospectus constitutes a prospectus of CME Group Inc. for the shares of CME Group Class A common stock that it will issue to NYMEX Holdings, Inc. stockholders in the merger, and a joint proxy statement for stockholders of CME Group Inc. and NYMEX Holdings, Inc. and Class A members of New York Mercantile Exchange, Inc. Unless otherwise specified or the context so requires:

 

•

“Average CME Group Share Price” refers to the average closing sale price, rounded to four decimal places, of CME Group Class A common stock on the NYSE (as reported in the Wall Street Journal, New York City edition) for the period of ten consecutive trading days ending on the second full trading day prior to the effective time of the merger.

 

•

“CBOT Holdings” refers to CBOT Holdings, Inc., one of the predecessor companies to CME Group prior to the merger in 2007 between CME Holdings and CBOT Holdings.

 

•

“CME Group” refers to CME Group Inc. and its wholly-owned subsidiaries, “CME” refers to Chicago Mercantile Exchange Inc. and “CBOT” refers to Board of Trade of the City of Chicago, Inc.

 

•

“CME Group Amended Bylaws” refers to the Fifth Amended and Restated Bylaws of CME Group to be adopted pursuant to the Merger Agreement, which provide that the CME Group board of directors will consist of 33 members.

 

•

“CME Group Amended Charter” refers to the Third Amended and Restated Certificate of Incorporation of CME Group to be approved by CME Group stockholders pursuant to the Merger Agreement, which increases the maximum size of the CME Group board of directors from 30 to 33 directors and specifies that the number of CME Group directors is to be fixed exclusively by one or more resolutions adopted by the CME Group board of directors, which number may be no more than 33.

 

•

“CME Holdings” refers to Chicago Mercantile Exchange Holdings Inc., one of the predecessor companies to CME Group prior to the merger in 2007 between CME Holdings and CBOT Holdings.

 

•

“Lehman Brothers” refers to Lehman Brothers Inc., “Goldman Sachs” refers to Goldman, Sachs & Co., “William Blair” refers to William Blair & Company, L.L.C., “JPMorgan” refers to J.P. Morgan Securities Inc., “Merrill Lynch” refers to Merrill Lynch, Pierce, Fenner & Smith Incorporated and “Sandler O’Neill” refers to Sandler O’Neill + Partners, L.P.

 

•

“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group, Merger Sub, NYMEX Holdings and NYMEX, as the same may be amended from time to time.

 

•

“Merger Sub” refers to (i) prior to completion of the merger, CMEG NY Inc. and (ii) after completion of the merger, CMEG NYMEX Holdings Inc.

 

•

“NYMEX Amended Bylaws” refers to the Amended and Restated Bylaws of NYMEX to be approved by NYMEX Class A members pursuant to the Merger Agreement, which eliminate substantially all of the rights of NYMEX Class A members currently contained in the Bylaws of NYMEX.

 

•

“NYMEX Amended Charter” refers to the Second Amended and Restated Certificate of Incorporation of NYMEX to be approved by NYMEX Class A members pursuant to the Merger Agreement, which eliminates substantially all of the rights of NYMEX Class A members currently contained in the Amended and Restated Certificate of Incorporation of NYMEX.

 

•

“NYMEX Holdings” refers to NYMEX Holdings, Inc. and its wholly-owned subsidiaries, “NYMEX” refers to New York Mercantile Exchange, Inc. and “COMEX” refers to Commodity Exchange, Inc.

 

•

“NYMEX Rulebook” refers to the rules and regulations of NYMEX.

 

•

“Stock Issuance” refers to the issuance of shares of CME Group Class A common stock, par value $0.01 per share, by CME Group to NYMEX Holdings stockholders in the merger.

 

•

“We,” “us” or “our” refers to (i) prior to completion of the merger, CME Group and NYMEX Holdings and (ii) after completion of the merger, CME Group.

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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about CME Group and NYMEX Holdings from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available for you to review at the public reference room of the United States Securities and Exchange Commission, or the “SEC,” located at 100 F Street, N.E., Room 1580, Washington, DC 20549, and through the SEC’s website, www.sec.gov. You can also obtain those documents incorporated by reference in this joint proxy statement/prospectus, excluding exhibits to those documents, without charge, by requesting them from the appropriate company in writing or by telephone at the following addresses and telephone numbers:

 

CME Group Inc. 20 South Wacker Drive Chicago, Illinois 60606 (312) 930-1000 Attention: Shareholder Relations http://investor.cmegroup.com		NYMEX Holdings, Inc. One North End Avenue World Financial Center New York, New York 10282 (212) 299-2000 Attention: Investor Relations http://investor.nymex.com

If you would like to request documents, please do so by [            ], 2008 in order to receive them before your company’s special meeting.

Information contained in or otherwise accessible through the Internet sites listed above is not a part of this joint proxy statement/prospectus. All references in this joint proxy statement/prospectus to these Internet sites are inactive textual references and are for your information only.

No person is authorized to give any information or to make any representation with respect to the matters this joint proxy statement/prospectus describes other than those contained in this joint proxy statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by CME Group, NYMEX Holdings or NYMEX. This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this joint proxy statement/prospectus nor any distribution of securities made under this joint proxy statement/prospectus shall, under any circumstances, create an implication that there has been no change in the affairs of CME Group, NYMEX Holdings or NYMEX since the date of this joint proxy statement/prospectus or that the information contained herein is correct as of any time subsequent to the date of this joint proxy statement/prospectus.

See “Where You Can Find More Information” beginning on page 196.

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VOTING BY INTERNET, TELEPHONE OR MAIL

CME Group stockholders of record as of the applicable record date may submit their proxies by:

Internet. You can vote over the Internet by accessing the website at www.proxyvote.com and following the instructions on the website. Have your proxy card in hand when you access the website because you will have to enter the control number printed on your proxy card. Internet voting is available 24 hours a day. If you vote over the Internet, do not return your proxy card(s) by mail.

Telephone. You can vote by telephone by calling the toll-free number (800) 690-6903 in the United States, Canada and Puerto Rico on a touch-tone telephone. You will then be prompted to enter the control number printed on your proxy card and follow the subsequent instructions. Telephone voting is available 24 hours a day. If you vote by telephone, do not return your proxy card(s) by mail.

Mail. You can vote by mail by completing, signing, dating and mailing your proxy card(s) in the postage-paid envelope included with this joint proxy statement/prospectus. If you elect to vote by mail, you should vote early to ensure that your proxy card is received before the special meeting.

If you vote your proxy over the Internet or by telephone, you must do so before 11:00 P.M., Chicago time, the day before the special meeting.

NYMEX Holdings stockholders of record as of the applicable record date may submit their proxies by:

Internet. You can vote over the Internet by accessing the website at www.cesvote.com and following the instructions on the website. Have your proxy card in hand when you access the website because you will have to enter the control number printed on your proxy card. Internet voting is available 24 hours a day. If you vote over the Internet, do not return your proxy card(s) by mail.

Telephone. You can vote by telephone by calling the toll-free number (888) 693-8683 in the United States, Canada and Puerto Rico on a touch-tone telephone. You will then be prompted to enter the control number printed on your proxy card and follow subsequent instructions. Telephone voting is available 24 hours a day. If you vote by telephone, do not return your proxy card(s) by mail.

Mail. You can vote by mail by completing, signing, dating and mailing your proxy card(s) in the postage-paid envelope included with this joint proxy statement/prospectus. If you elect to vote by mail, you should vote early to ensure that your proxy card is received before the special meeting.

If you vote your proxy over the Internet or by telephone, you must do so before 6:00 A.M., New York time, on the meeting date.

NYMEX Class A members of record as of the applicable record date may submit their proxies by:

Internet. You can vote over the Internet by accessing the website at www.cesvote.com and following the instructions on the website. Have your proxy card in hand when you access the website because you will have to enter the control number printed on your proxy card. Internet voting is available 24 hours a day. If you vote over the Internet, do not return your proxy card(s) by mail.

Telephone. You can vote by telephone by calling the toll-free number (888) 693-8683 in the United States, Canada and Puerto Rico on a touch-tone telephone. You will then be prompted to enter the control number printed on your proxy card and follow subsequent instructions. Telephone voting is available 24 hours a day. If you vote by telephone, do not return your proxy card(s) by mail.

Mail. You can vote by mail by completing, signing, dating and mailing your proxy card(s) in the postage-paid envelope included with this joint proxy statement/prospectus. If you elect to vote by mail, you should vote early to ensure that your proxy card is received before the special meeting.

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If you vote your proxy over the Internet or by telephone, you must do so before 6:00 A.M., New York time, on the meeting date.

If you hold a NYMEX Class A membership, you should refer to the membership purchase offer documents mailed to you under separate cover for important information and instructions on how to complete and return your membership purchase offer documents. This joint proxy statement/prospectus is not an offer to purchase any NYMEX Class A membership. An offer to purchase the NYMEX Class A memberships is being made only pursuant to the membership purchase offer documents.

Voting Shares Held in Street Name

If you are a CME Group or NYMEX Holdings stockholder and hold your shares through a bank, broker, custodian or other recordholder (that is, in street name), please refer to your proxy card or the information forwarded by your bank, broker, custodian or other recordholder to see what options are available to you.

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [            ], 2008

To the Stockholders of CME Group Inc.:

The CME Group board of directors has called for a special meeting of CME Group stockholders to be held on [            ], 2008, at [            ], Chicago time, at [            ], [            ], Chicago, Illinois, for the following purposes:

 

1.

to consider and vote on a proposal to approve the Third Amended and Restated Certificate of Incorporation of CME Group, which increases the maximum size of the CME Group board of directors from 30 to 33 directors and specifies that the number of CME Group directors is to be fixed exclusively by one or more resolutions adopted by the CME Group board of directors, which number may be no more than 33 directors;

 

2.

to consider and vote on a proposal to approve the issuance of CME Group Class A common stock, par value $0.01 per share, to NYMEX Holdings, Inc. stockholders pursuant to the merger contemplated by the Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group, CMEG NY Inc., NYMEX Holdings and New York Mercantile Exchange, Inc., as the same may be amended from time to time (the “Merger Agreement”), pursuant to which NYMEX Holdings will merge with and into CMEG NY Inc.;

 

3.

to consider and vote upon the adjournment of the special meeting of CME Group stockholders, if necessary, to solicit additional proxies; and

 

4.

to transact such other business as may properly be brought before the special meeting of CME Group stockholders or any adjournments or postponements of the special meeting of CME Group stockholders.

Proposals 1 and 2 are conditioned on each other and approval of each is required for completion of the merger.

Only holders of record of CME Group Class A and Class B common stock at the close of business on [            ], 2008, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting of CME Group stockholders or any adjournments or postponements of the special meeting.

We cannot complete the merger unless holders of a majority of the outstanding shares of CME Group Class A and Class B common stock entitled to vote, voting together as a single class, vote in favor of the proposal to approve the Third Amended and Restated Certificate of Incorporation of CME Group and the holders of a majority of the shares of CME Group Class A and Class B common stock present at the meeting and entitled to vote, voting together as a single class, vote in favor of the proposal to approve the issuance of CME Group Class A common stock to NYMEX Holdings stockholders pursuant to the Merger Agreement (provided that the total number of votes cast on the stock issuance represents over 50% of the outstanding shares of CME Group Class A and Class B common stock, voting together as a single class).

For more information about the proposals described above and the other transactions contemplated by the Merger Agreement, please review the accompanying joint proxy statement/prospectus, the Merger Agreement attached to it as Annex A and the Third Amended and Restated Certificate of Incorporation of CME Group attached to it as Annex H.

The CME Group board of directors recommends that CME Group stockholders vote “FOR” the proposal to approve the Third Amended and Restated Certificate of Incorporation of CME Group, “FOR” the proposal to approve the issuance of CME Group Class A common stock to NYMEX Holdings stockholders pursuant to the Merger Agreement and “FOR” the proposal to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies.

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Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by using the Internet or by telephone as described in the instructions included with your proxy card. Your failure to vote on the proposal to approve the Third Amended and Restated Certificate of Incorporation of CME Group will have the same effect as voting against the proposal. Your failure to vote on the proposal to approve the issuance of CME Group Class A common stock to NYMEX Holdings stockholders pursuant to the Merger Agreement will have the same effect as voting against the proposal, unless holders of more than 50% of all outstanding shares of CME Group Class A and Class B common stock entitled to vote on the matter, voting together as a single class, cast votes, in which event your failure to vote on the proposal will have no effect on the result of the vote. Your failure to vote on the proposal to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies will have no effect on the result of the vote.

By Order of the Board of Directors,

Kathleen M. Cronin

Corporate Secretary

Chicago, Illinois

[            ], 2008

PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL INNISFREE M&A INCORPORATED AT (877) 456-3488.

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [            ], 2008

To the Stockholders of NYMEX Holdings, Inc.:

The NYMEX Holdings board of directors has called for a special meeting of NYMEX Holdings stockholders to be held on [            ], 2008, at [            ], New York time, at [            ], [            ], New York, New York, for the following purposes:

 

1.

to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group Inc., CMEG NY Inc., NYMEX Holdings and New York Mercantile Exchange, Inc., as the same may be amended from time to time (the “Merger Agreement”), pursuant to which NYMEX Holdings will merge with and into CMEG NY Inc.;

 

2.

to consider and vote upon the adjournment of the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies; and

 

3.

to transact such other business as may properly be brought before the special meeting of NYMEX Holdings stockholders or any adjournments or postponements of the special meeting.

Only holders of record of NYMEX Holdings common stock at the close of business on [            ], 2008, the record date for the special meeting, are entitled to notice of, and to vote at, the NYMEX Holdings special meeting or any adjournments or postponements of the special meeting.

We cannot complete the merger unless holders of a majority of the outstanding shares of NYMEX Holdings common stock entitled to vote, voting together as a single class, vote in favor of the proposal to adopt the Merger Agreement and thus approve the merger.

For more information about the merger proposal described above and the other transactions contemplated by the Merger Agreement, please review the accompanying joint proxy statement/prospectus and the Merger Agreement attached to it as Annex A.

The NYMEX Holdings board of directors unanimously recommends that NYMEX Holdings stockholders vote “FOR” the proposal to adopt the Merger Agreement and “FOR” the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies.

Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by using the Internet or by telephone as described in the instructions included with your proxy card. Your failure to vote on the proposal to adopt the Merger Agreement will have the same effect as voting against the merger. Your failure to vote on the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies will have no effect on the result of the vote.

By Order of the Board of Directors,

Donna Talamo

Corporate Secretary

New York, New York

[            ], 2008

PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE MERGER PROPOSAL OR ABOUT VOTING YOUR SHARES, PLEASE CALL D.F. KING & CO., INC. AT (800) 758-5378.

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NOTICE OF SPECIAL MEETING OF CLASS A MEMBERS

TO BE HELD ON [            ], 2008

To the Class A Members of New York Mercantile Exchange, Inc.:

The NYMEX board of directors has called for a special meeting of NYMEX Class A members to be held on [            ], 2008, at [            ], New York time, at [            ], [            ], New York, New York, for the following purposes:

 

1.

to consider and vote upon a proposal to approve the Second Amended and Restated Certificate of Incorporation of NYMEX, which eliminates substantially all of the rights of NYMEX Class A members currently contained in the Amended and Restated Certificate of Incorporation of NYMEX, as contemplated by the Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group Inc., CMEG NY Inc., NYMEX Holdings, Inc. and NYMEX, as the same may be amended from time to time (the “Merger Agreement”), pursuant to which NYMEX Holdings will merge with and into CMEG NY Inc.;

 

2.

to consider and vote upon a proposal to approve the Amended and Restated Bylaws of NYMEX, which eliminate substantially all of the rights of NYMEX Class A members currently contained in the Bylaws of NYMEX, as contemplated by the Merger Agreement;

 

3.

to consider and vote upon the adjournment of the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies; and

 

4.

to transact any other business as may properly be brought before the special meeting of NYMEX Class A members or any adjournment or postponement of the special meeting.

Only NYMEX Class A members at the close of business on [            ], 2008, the record date for the special meeting, are entitled to notice of, and to vote at, the NYMEX special meeting or any adjournments or postponements of the special meeting.

We cannot complete the merger unless holders of 75% of the outstanding NYMEX Class A memberships vote in favor of the proposals to approve the Second Amended and Restated Certificate of Incorporation of NYMEX and the Amended and Restated Bylaws of NYMEX.

For more information about the proposals described above and the other transactions contemplated by the Merger Agreement, please review the accompanying joint proxy statement/prospectus, the Merger Agreement attached to it as Annex A, the Second Amended and Restated Certificate of Incorporation of NYMEX attached to it as Annex J and the Amended and Restated Bylaws of NYMEX attached to it as Annex K.

Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by using the Internet or by telephone as described in the instructions included with your proxy card. Your failure to vote on the proposals to approve the Second Amended and Restated Certificate of Incorporation of NYMEX and the Amended and Restated Bylaws of NYMEX will have the same effect as voting against such proposals. Your failure to vote on the proposal to adjourn the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies will have no effect on the result of the vote.

By Order of the Board of Directors,

Donna Talamo

Corporate Secretary

New York, New York

[            ], 2008

PLEASE VOTE YOUR MEMBERSHIPS PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR MEMBERSHIPS, PLEASE CALL D.F. KING & CO., INC. AT (800) 758-5378.

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TABLE OF CONTENTS

 

SUMMARY		1
Questions and Answers about the Merger and Related Transactions		1
Questions and Answers about the Membership Purchase Offer		10
Other Information Regarding the Merger		12
The Merger Agreement		16
The Membership Purchase Offer		22
The Voting and Support Agreements		23
Regulatory Approvals Required for the Merger		24
U.S. Federal Income Tax Consequences of the Merger		24
Legal Proceedings Regarding the Merger		24
Appraisal Rights		25
The Companies		26
Comparative Stock Price and Dividends		27
Summary Historical Financial Data		28
Summary Historical Consolidated Financial Data of CME Group		28
Summary Historical Consolidated Financial Data of NYMEX Holdings		29
Summary Unaudited Pro Forma Condensed Combined Financial Data		30
Comparative Per Share Data		31
RISK FACTORS		32
FORWARD-LOOKING STATEMENTS		41
THE SPECIAL MEETING OF CME GROUP STOCKHOLDERS		43
General		43
Purpose of the Special Meeting of CME Group Stockholders		43
Record Date and Voting		43
Vote Required		44
Recommendation of the Board of Directors		45
Revocability of Proxies		45
Attending the Special Meeting		45
Voting Electronically or by Telephone		45
Solicitation of Proxies		46
Proposal 1—Approval of the CME Group Amended Charter		46
Proposal 2—Approval of the Stock Issuance		47
Proposal 3—Possible Adjournment of the Special Meeting of CME Group Stockholders		47
Other Matters to Come before the Special Meeting of CME Group Stockholders		47
THE SPECIAL MEETING OF NYMEX HOLDINGS STOCKHOLDERS		48
General		48
Purpose of the Special Meeting of NYMEX Holdings Stockholders		48
Record Date and Voting		48
Vote Required		49
Recommendation of the Board of Directors		49
Revocability of Proxies		50
Attending the Special Meeting		50
Voting Electronically or by Telephone		50
Solicitation of Proxies		51
Proposal 1—Adoption of the Merger Agreement		51
Proposal 2—Possible Adjournment of the Special Meeting of NYMEX Holdings Stockholders		51
Other Matters to Come before the Special Meeting of NYMEX Holdings Stockholders		51
THE SPECIAL MEETING OF NYMEX CLASS A MEMBERS		52
General		52
Purpose of the Special Meeting of NYMEX Class A Members		52

 

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Record Date and Voting		52
Vote Required		53
Revocability of Proxies		54
Attending the Special Meeting		54
Voting Electronically or by Telephone		54
Solicitation of Proxies		54
Proposal 1—Approval of the NYMEX Amended Charter		54
Proposal 2—Approval of the NYMEX Amended Bylaws		55
Proposal 3—Possible Adjournment of the Special Meeting of NYMEX Class A Members		57
Other Matters to Come before the Special Meeting of NYMEX Class A Members		57
THE MERGER		58
Background of the Merger		58
CME Group’s Reasons for the Merger; Recommendation of CME Group’s Board of Directors		68
NYMEX Holdings’ Reasons for the Merger; Recommendation of NYMEX Holdings’ Board of Directors		70
Opinion of Lehman Brothers, Financial Advisor to CME Group		73
Opinion of Goldman Sachs, Financial Advisor to CME Group		80
Opinion of William Blair, Financial Advisor to CME Group		91
Opinion of JPMorgan, Financial Advisor to NYMEX Holdings		98
Opinion of Merrill Lynch, Financial Advisor to NYMEX Holdings		106
Opinion of Sandler O’Neill, Financial Advisor to NYMEX Holdings		114
Interests of CME Group Executive Officers and Directors in the Merger		119
Interests of NYMEX Holdings Executive Officers and Directors in the Merger		119
Interests of NYMEX Holdings Directors Related to the Membership Purchase Offer		129
CME Group Amended Charter and CME Group Amended Bylaws		129
CME Group Board of Directors after Completion of the Merger		130
Stock Exchange Listing		130
Material Contracts Between the Parties		130
Legal Proceedings Regarding the Merger		131
Appraisal Rights		131
THE MERGER AGREEMENT		135
The Merger		135
Effective Time and Completion of the Merger		135
CME Group Amended Charter and CME Group Amended Bylaws		135
CME Group Board of Directors and Board Officers after Completion of the Merger		135
Consideration to be Received in the Merger		136
Stock Options and Other Equity Rights		138
Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration		138
Representations and Warranties		140
Conduct of Business Pending the Merger		141
Membership Purchase Offer		143
Special Meeting of NYMEX Class A Members and NYMEX Class A Member Approval		143
Efforts to Complete the Merger		143
No Solicitation of Alternative Transactions		143
Employee Matters		145
Indemnification and Insurance		145
NYMEX Rulebook		146
Conditions to Complete the Merger		146
Termination of the Merger Agreement		148
Amendment, Waiver and Extension of the Merger Agreement		150
Fees and Expenses		150
THE MEMBERSHIP PURCHASE OFFER		151
THE VOTING AND SUPPORT AGREEMENTS		153

 

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ACCOUNTING TREATMENT		155
REGULATORY APPROVALS		155
United States Antitrust		155
European Approvals		155
Commodity Futures Trading Commission		156
Other Notices and Approvals		156
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER		157
Tax Consequences of the Merger Generally		157
Tax Consequences of a “Forward” Merger for CME Group, CME Group Stockholders and NYMEX Holdings		158
Tax Consequences of a “Forward” Merger for U.S. Holders		158
Cash in Lieu of Fractional Shares of CME Class A Common Stock		160
Information Reporting and Backup Withholding		160
Reporting Requirements		160
Tax Consequences of a “Reverse Merger”		160
NYMEX Holdings Stockholders Exercising Appraisal Rights		161
THE COMPANIES		161
CME Group and Merger Sub		161
NYMEX Holdings and NYMEX		162
MARKET PRICE AND DIVIDEND DATA		164
CME Group		164
NYMEX Holdings		165
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION FOR CME GROUP		166
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION FOR CME GROUP		171
COMPARATIVE RIGHTS OF NYMEX HOLDINGS AND CME GROUP STOCKHOLDERS PRIOR TO AND AFTER THE MERGER		178
COMPARATIVE RIGHTS OF NYMEX CLASS A MEMBERS PRIOR TO AND AFTER THE MERGER		190
LEGAL MATTERS		194
EXPERTS		194
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS		194
CME Group		194
NYMEX Holdings		195
WHERE YOU CAN FIND MORE INFORMATION		196
ANNEXES
Agreement and Plan of Merger, dated as of March 17, 2008		A-1
Opinion of Lehman Brothers, dated as of March 16, 2008		B-1
Opinion of Goldman Sachs, dated as of March 17, 2008		C-1
Opinion of William Blair, dated as of March 16, 2008		D-1
Opinion of JPMorgan, dated as of March 16, 2008		E-1
Opinion of Merrill Lynch, dated as of March 16, 2008		F-1
Opinion of Sandler O’Neill, dated as of March 16, 2008		G-1
Third Amended and Restated Certificate of Incorporation of CME Group		H-1
Fifth Amended and Restated Bylaws of CME Group		I-1
Second Amended and Restated Certificate of Incorporation of NYMEX		J-1
Amended and Restated Bylaws of NYMEX		K-1
Section 262 of the General Corporation Law of the State of Delaware		L-1

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including each of CME Group’s and NYMEX Holdings’ Annual Reports on Form 10-K for the fiscal year ended December 31, 2007 and the matters addressed under the heading “Forward-Looking Statements” beginning on page 41 of this joint proxy statement/prospectus, you should carefully consider the following risk factors in deciding whether to vote in favor of the proposals described in this joint proxy statement/prospectus.

Because the market price of CME Group Class A common stock will fluctuate, NYMEX Holdings stockholders cannot be sure of the value of the merger consideration they will receive.

Upon completion of the merger, for each share of NYMEX Holdings common stock that they own, NYMEX Holdings stockholders will be entitled to receive, at their election and subject to proration as described below, consideration in the form of either CME Group Class A common stock or cash. The cash consideration per share of NYMEX Holdings common stock for which a valid cash election has been made will be equal to (i) $36.00 plus (ii) the Average CME Group Share Price, times 0.1323. The stock consideration per share of NYMEX Holdings common stock for which a valid stock election has been made will be a number of shares of CME Group Class A common stock equal to the cash consideration payable per share of NYMEX Holdings common stock for which an election to receive cash has been made divided by the Average CME Group Share Price. The Average CME Group Share Price for purposes of this calculation may differ from the closing price on the date we announced the merger, on the date that this joint proxy statement/prospectus was mailed, on the dates of the special meetings, on the date that is the deadline for making an election, on the effective time of the merger and on the date you receive the merger consideration. Because the merger consideration will not be adjusted to reflect any changes in the market price of CME Group Class A common stock prior to the effective time of the merger, the market value of the CME Group Class A common stock issued in the merger and the NYMEX Holdings common stock surrendered in the merger may be higher or lower than the values of these shares on earlier dates.

Any change in the market price of CME Group Class A common stock prior to completion of the merger will affect the value of the merger consideration that NYMEX Holdings stockholders will receive upon the completion of the merger. Accordingly, at the time of the special meeting of NYMEX Holdings stockholders and prior to the election deadline, NYMEX Holdings stockholders will not necessarily know or be able to calculate the amount of the cash consideration or the value of the stock consideration they would receive upon the completion of the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, governmental actions, legal proceedings and developments, market assessments of the benefits of the merger, the likelihood that the merger will be completed and the timing of completion, the prospects of post-merger operations, regulatory considerations and other factors. Many of these factors are beyond our control. Neither CME Group nor NYMEX Holdings is permitted to terminate the Merger Agreement solely because of changes in the market price of the other party’s common stock. In addition, the merger may not be completed until a significant period of time has passed after the special meetings. As a result, the market values of CME Group Class A common stock and NYMEX Holdings common stock may vary significantly from the date of the special meetings to the date of the completion of the merger. You are urged to obtain up-to-date prices for CME Group Class A common stock and NYMEX Holdings common stock.

The ability of NYMEX Holdings stockholders to elect to receive cash and/or shares of CME Group Class A common stock in exchange for their shares of NYMEX Holdings common stock will be subject to proration in the event of an oversubscription or undersubscription of the cash election.

The cash election and stock election available to NYMEX Holdings stockholders in the merger is subject to proration to ensure the total amount of cash paid, and the total number of shares of CME Group Class A common

 

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stock issued, in the merger to the NYMEX Holdings stockholders, as a whole, will equal the total amount of cash and the number of shares that would be paid and issued if all of the NYMEX Holdings stockholders received $36.00 in cash and 0.1323 shares of CME Group Class A common stock per share of NYMEX Holdings common stock. As a result, the form of consideration that any NYMEX Holdings stockholder receives will not be known at the time that he or she makes his or her elections because the consideration will depend on the total number of NYMEX Holdings shares for which either a cash election or stock election is made. In the event that the aggregate cash consideration is undersubscribed, NYMEX Holdings stockholders who elected to receive stock consideration in the merger will receive a portion of their consideration in cash. In the event that the aggregate cash consideration is oversubscribed, CME Group has the option to increase the aggregate cash consideration above the mandatory cash component, subject to certain limitations, and/or provide a portion of the consideration payable to NYMEX Holdings stockholders who elected to receive cash consideration in the merger in the form of CME Group Class A common stock. Accordingly, NYMEX Holdings stockholders may not receive exactly the amount and type of consideration that they elected to receive in the merger, which could result in, among other things, tax consequences that differ from those that would have resulted if they had received the form of consideration that they had elected (including the potential recognition of gain for U.S. federal income tax purposes if they receive cash).

Because there is no way to predict the value of shares of CME Group Class A common stock after the merger, the value of the consideration that NYMEX Holdings stockholders will receive in the merger may vary depending on the type of election that they made for each share of NYMEX Holdings common stock. The amount of consideration to be received for each share of NYMEX Holdings common stock (regardless of whether such share is subject to a cash election or a stock election) is based on the Average CME Group Share Price, as set forth in the Merger Agreement. This Average CME Group Share Price, however, may be different from the actual value of a share of CME Group Class A common stock upon completion of the merger. As a result, the value of the consideration received by NYMEX Holdings stockholders who make any particular election for each of their shares may vary from the value of the consideration received by NYMEX Holdings stockholders who make a different combination of elections.

For a discussion of the election mechanism and the consideration paid per share of NYMEX Holdings common stock for which either a cash election or a stock election has been made, see “The Merger Agreement—Consideration to be Received in the Merger” beginning on page 136. For a discussion of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 157.

We may fail to realize all of the anticipated benefits of the merger.

The success of the merger will depend, in part, on our ability to achieve the anticipated cost synergies and other strategic benefits from combining the businesses of CME Group and NYMEX Holdings. We expect CME Group to benefit from operational synergies resulting from the consolidation of capabilities and elimination of redundancies as well as greater efficiencies from increased scale. However, to realize these anticipated benefits, we must successfully combine the businesses of CME Group and NYMEX Holdings. If we are not able to achieve these objectives, the anticipated cost synergies and other strategic benefits of the merger may not be realized fully or at all or may take longer to realize than expected. We may fail to realize some or all of the anticipated benefits of the transaction in the amounts and times projected for a number of reasons, including that the integration may take longer than anticipated, be more costly than anticipated or have unanticipated adverse results relating to CME Group’s or NYMEX Holdings’ existing businesses.

The integration of the businesses and operations of CME Group and NYMEX Holdings involves risks, and the failure to integrate successfully the businesses and operations in the expected time frame may adversely affect CME Group’s future results.

Historically, CME Group and NYMEX Holdings have operated as independent companies, and they will continue to do so until the completion of the merger. The management of CME Group may face significant

 

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challenges in consolidating the functions of CME Group and NYMEX Holdings and their subsidiaries, integrating their technologies, organizations, procedures, policies and operations, as well as addressing differences in the business cultures of the two companies and retaining key personnel. In connection with the merger, CME Group expects to integrate certain operations of CME Group and NYMEX Holdings, including, among other things, back-office operations, information technology and regulatory compliance. However, the combined company will continue to operate a NYMEX trading floor at its existing location or an alternative location in New York, New York, as long as both revenue and profitability thresholds are achieved going forward. Given that previously CME Group has not operated a trading floor in a geographic location that is remote from its headquarters in Chicago, Illinois, continuing to operate a NYMEX trading floor in New York, New York after the merger may present unique challenges. The integration of the two companies will be complex and time consuming, and require substantial resources and effort. The integration process and other disruptions resulting from the merger may disrupt each company’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with members of CME, CBOT and NYMEX and other market participants, employees, regulators and others with whom we have business or other dealings. If CME Group fails to manage the integration of these businesses effectively, its growth strategy and future profitability could be negatively affected, and it may fail to achieve the intended benefits of the merger.

CME Group and NYMEX Holdings will incur transaction, integration and restructuring costs in connection with the merger.

CME Group and NYMEX Holdings expect to incur significant costs associated with transaction fees, professional services and other costs related to the merger. Specifically, CME Group and NYMEX Holdings expect to incur approximately $142 million for transaction costs related to the merger. CME Group also will incur integration and restructuring costs following the completion of the merger as CME Group integrates the business of NYMEX Holdings with that of CME Group. Although CME Group and NYMEX Holdings expect that the realization of efficiencies related to the integration of the businesses will offset incremental transaction, merger-related and restructuring costs over time, this net benefit may not be achieved in the near term, or at all.

The fairness opinions obtained by CME Group and NYMEX Holdings from their respective financial advisors will not reflect changes in circumstances between signing the Merger Agreement and completion of the merger.

CME Group and NYMEX Holdings have not obtained updated opinions as of the date of this joint proxy statement/prospectus from Lehman Brothers, Goldman Sachs and William Blair, CME Group’s financial advisors, JPMorgan and Merrill Lynch, NYMEX Holdings’ financial advisors, or Sandler O’Neill, NYMEX Holdings’ financial advisor. Changes in the operations and prospects of CME Group or NYMEX Holdings, general market and economic conditions and other factors which may be beyond the control of CME Group or NYMEX Holdings, and on which the fairness opinions were based, may alter the value of CME Group or NYMEX Holdings or the prices of CME Group Class A common stock, NYMEX Holdings common stock by the time the merger is completed. The opinions are based on the information in existence on the date delivered and will not be updated as of the time the merger will be completed. Because CME Group and NYMEX Holdings currently do not anticipate asking their respective financial advisors to update their opinions, the opinions given at the time the Merger Agreement was signed do not address the fairness of the merger consideration, from a financial point of view, at the time of the special meetings or at the time the merger is completed. For a description of the opinions that CME Group and NYMEX Holdings received from their respective financial advisors, please refer to “The Merger—Opinion of Lehman Brothers, Financial Advisor to CME Group” beginning on page 73, “The Merger—Opinion of Goldman Sachs, Financial Advisor to CME Group” beginning on page 80, “The Merger—Opinion of William Blair, Financial Advisor to CME Group” beginning on page 91, “The Merger—Opinion of JPMorgan, Financial Advisor to NYMEX Holdings” beginning on page 98, “The Merger—Opinion of Merrill Lynch, Financial Advisor to NYMEX Holdings” beginning on page 106 and “The Merger—Opinion of Sandler O’Neill, Financial Advisor to NYMEX Holdings” beginning on page 114. For a description of the other factors considered by the boards of directors of CME Group and NYMEX Holdings in

 

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determining to approve the merger, please refer to “The Merger—CME Group’s Reasons for the Merger; Recommendation of CME Group’s Board of Directors” beginning on page 68 and “The Merger—NYMEX Holdings’ Reasons for the Merger; Recommendation of NYMEX Holdings’ Board of Directors” beginning on page 70, respectively.

The Merger Agreement limits NYMEX Holdings’ ability to pursue alternatives to the merger.

NYMEX Holdings has agreed that it will not initiate or solicit or knowingly facilitate or encourage any inquiries or proposals regarding, or take certain other actions in connection with, any acquisition proposals by third parties, subject to limited exceptions, unless its board of directors determines in good faith, after consultation with its legal and financial advisors, that such inquiry or proposal constitutes a superior proposal or could reasonably be expected to lead to a superior proposal and that the failure to take such action could reasonably be expected to violate its fiduciary duties under applicable law. NYMEX Holdings has also agreed that its board of directors will not change its recommendation to its stockholders or approve any alternative agreement, subject to limited exceptions, including that, at any time prior to the adoption of the Merger Agreement by the NYMEX Holdings stockholders, the NYMEX Holdings board of directors may make a change in recommendation in response to a superior proposal or an intervening event if the NYMEX Holdings board of directors determines in good faith, after consultation with its legal and financial advisors, that the failure to do so would reasonably be expected to violate its fiduciary duties to the NYMEX Holdings stockholders. In any event, the NYMEX Holdings board of directors may not change its recommendation unless it provides notice to CME Group that it is prepared to change its recommendation and gives CME Group five business days to make a proposal that the NYMEX Holdings board of directors determines is at least as favorable to the NYMEX Holdings stockholders as such superior proposal or obviates the need to change its recommendation in response to an intervening event. Notwithstanding a change in recommendation by the NYMEX Holdings board of directors, CME Group has the option, exercisable within five business days after such change in recommendation, to cause the NYMEX Holdings board of directors to submit the Merger Agreement to the NYMEX Holdings stockholders for the purpose of adopting the Merger Agreement. For a discussion of the solicitation restriction, see “The Merger Agreement—No Solicitation of Alternative Transactions” beginning on page 143. In addition, under specified circumstances, CME Group or NYMEX Holdings may be required to pay a termination fee of $308.1 million if the merger is not consummated. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of NYMEX Holdings from considering or proposing an acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire NYMEX Holdings than it might otherwise have proposed to pay.

CME Group’s and NYMEX Holdings’ executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of CME Group stockholders and NYMEX Holdings stockholders.

Executive officers and directors of CME Group and NYMEX Holdings negotiated the terms of the Merger Agreement, and CME Group’s and NYMEX Holdings’ boards of directors approved and recommended that their stockholders vote to approve the CME Group Amended Charter and the Stock Issuance and adopt the respective Merger Agreement, respectively. These executive officers and directors may have interests in the merger that are different from, or in addition to, those of CME Group and NYMEX Holdings stockholders generally. These interests include the continued employment of certain executive officers of CME Group and NYMEX Holdings with CME Group, the continued service of directors of CME Group and certain directors of NYMEX Holdings as NYMEX Directors, the accelerated vesting of equity awards granted to executive officers of NYMEX Holdings, and the indemnification of former NYMEX Holdings directors and executive officers by CME Group. In addition, pursuant to existing employment agreements, certain executive officers of NYMEX Holdings could receive substantial payments in connection with the merger, and NYMEX Holdings could also be obligated to make gross-up payments to certain of those executives for the amount of certain taxes resulting from some of

 

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these payments. See “The Merger—Interests of CME Group Executive Officers and Directors in the Merger” beginning on page 119 and “The Merger—Interests of NYMEX Holdings Executive Officers and Directors in the Merger” beginning on page 119.

A majority of NYMEX Holdings’ directors have interests in the merger that are different from, or in addition to, the interests of other NYMEX Holdings stockholders with respect to the rights of NYMEX Class A members.

A majority of the directors of NYMEX Holdings are NYMEX Class A members. In connection with and as a condition to the merger, NYMEX is offering to purchase 100% of the outstanding NYMEX Class A memberships, including all associated rights and privileges, for a purchase price of $612,000 per membership. It is a condition to completion of the merger that at least 75% of the NYMEX Class A memberships be purchased in the membership purchase offer. See “The Membership Purchase Offer” beginning on page 151 for additional information. Also, in connection with the merger, the existing certificate of incorporation and bylaws of NYMEX will be amended and restated, as a result of which substantially all of the rights currently held by NYMEX Class A members will be eliminated. See “—Additional Risks Relating to NYMEX Class A members—The NYMEX Amended Charter and the NYMEX Amended Bylaws will result in the elimination of substantially all of the NYMEX Class A members’ rights under the existing certificate of incorporation and bylaws of NYMEX” beginning on page 40 and “The Special Meeting of NYMEX Class A Members” beginning on page 52 for additional information on the impact of the merger and related transactions on the rights of NYMEX Class A members. As a result of these interests, directors of NYMEX Holdings who are NYMEX Class A members could have had an incentive to negotiate the terms and conditions of the merger and related transactions to increase or protect their rights as NYMEX Class A members or to increase the amount payable by NYMEX to NYMEX Class A members in the membership purchase offer. In considering these facts and the other information contained in this joint proxy statement/prospectus, you should be aware of these interests.

The unaudited pro forma financial information included in this joint proxy statement/prospectus may not be indicative of what CME Group’s actual financial position or results of operations would have been.

The unaudited pro forma financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what CME Group’s actual financial position or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to NYMEX Holdings’ net assets. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of NYMEX Holdings as of the date of the completion of the merger. In addition, subsequent to the completion of the merger, there may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. See “Unaudited Pro Forma Condensed Combined Financial Information for CME Group” beginning on page 166 for more information.

CME Group and NYMEX Holdings are parties to pending lawsuits in connection with the merger.

On March 17, 2008, Cataldo J. Capozza filed a putative class action complaint in the Delaware Court of Chancery against NYMEX Holdings, the NYMEX Holdings board of directors and CME Group. The complaint alleges, among other things, that NYMEX Holdings and its board of directors breached their fiduciary duties in approving the Merger Agreement by failing to take steps to maximize the value of NYMEX Holdings to its public stockholders, failing to properly value NYMEX Holdings and taking steps to avoid competitive bidding, to cap the price of NYMEX Holdings’ common stock and to give CME Group an unfair advantage by failing to solicit other potential acquirors or alternative transactions. The complaint further alleges that CME Group aided and abetted the alleged breaches of fiduciary duty. Two additional putative class action complaints subsequently

 

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were filed in the Delaware Court of Chancery against NYMEX Holdings, the NYMEX Holdings board of directors and CME Group. On May 16, 2008, the Court of Chancery ordered that the three class actions be consolidated and that all subsequently filed actions concerning the same subject matter be consolidated as well. The Court of Chancery also designated the complaint filed by Cataldo J. Capozza the operative complaint that will govern the class action moving forward. The plaintiffs seek to enjoin the merger. NYMEX Holdings and CME Group intend to defend vigorously against these allegations.

Completion of the merger is subject to the receipt of consents and approvals from, or the making of filings with, government entities that could delay completion of the merger or impose conditions that could have a material adverse effect on CME Group or that could cause abandonment of the merger.

The merger is subject to review under the HSR Act by either the Antitrust Division of the U.S. Department of Justice or the U.S. Federal Trade Commission. Under this statute, CME Group and NYMEX Holdings are required to make pre-merger notification filings and to await the expiration of the statutory waiting period prior to completing the merger. We cannot assure you that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that any such challenge will not be successful. Any such challenge may seek to impose a preliminary or permanent injunction, conditions on the completion of the merger or require changes to the terms of the merger. While we do not currently expect that any such preliminary or permanent injunction, conditions or changes would be imposed, we cannot assure you that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on us or limiting the revenues of CME Group following the merger, any of which might have a material adverse effect on CME Group following the merger. Neither CME Group nor NYMEX Holdings is obligated to complete the merger if any such conditions, individually or in the aggregate, would reasonably be expected to result in (i) a material impairment of the expected benefits of the merger or (ii) a material impact on CME Group or NYMEX Holdings following the merger. Additionally, the merger is subject to necessary approvals from certain governmental entities and regulators. In particular, the merger will reduce or eliminate the number of outstanding NYMEX Class A memberships, introduce a trading permit program and eliminate substantially all of the rights of any remaining NYMEX Class A members. Rules to implement these changes will be filed with the Commodity Futures Trading Commission, or “CFTC,” under the Commodity Exchange Act on a conditional basis in advance of the effective time of the merger so that they may be placed into effect immediately upon the effective time of the merger. Although we expect that in most cases these rule changes will be self-certified in accordance with the Commodity Exchange Act, certain rules may be submitted for approval of the CFTC. While we do not currently expect a delay in connection with the CFTC’s review and/or approval of the rules to implement these changes, we cannot assure you that such delay will not occur. See “Regulatory Approvals” beginning on page 155.

Any delay in completion of the merger may significantly reduce the benefits expected to be obtained from the merger.

In addition to the required regulatory clearances and approvals, the merger is subject to a number of other conditions beyond our control that may prevent, delay or otherwise negatively affect its completion. See “Regulatory Approvals” beginning on page 155 and “The Merger Agreement—Conditions to Complete the Merger” beginning on page 146. We cannot predict whether and when these other conditions will be satisfied. Any delay in completing the merger may significantly reduce the cost and revenue synergies and other benefits that we expect to achieve if we successfully complete the merger within the expected timeframe and integrate our respective businesses.

CME Group may incur significant indebtedness in order to finance the merger, which may limit CME Group’s operating flexibility.

In order to finance the cash portion of the merger consideration, CME Group expects to incur incremental borrowings of $2.5 billion to $4.0 billion. CME Group has not obtained any commitments for the financing. As of March 31, 2008, on a pro forma basis after giving effect to the merger, assuming that CME Group pays the

 

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mandatory cash component of the merger consideration to NYMEX Holdings stockholders of $3.4 billion, CME Group would have had $3.0 billion in indebtedness outstanding. This level of indebtedness may:

 

•

require CME Group to dedicate a significant portion of its cash flow from operations to payments on its debt, thereby reducing the availability of cash flow to fund capital expenditures, to pursue other acquisitions or investments in new technologies, to pay dividends and for general corporate purposes;

 

•

increase CME Group’s vulnerability to general adverse economic conditions, including increases in interest rates if the borrowings bear interest at variable rates; and

 

•

limit CME Group’s flexibility in planning for, or reacting to, changes in or challenges relating to its business and industry.

In addition, to the extent that the credit ratings of CME Group are below pre-merger levels, borrowing costs may increase, and to the extent that the credit ratings are below investment grade, the terms of the financing obligations could include restrictions, such as affirmative and negative covenants, conditions to borrowing, subsidiary guarantees and stock pledges. A failure to comply with these restrictions could result in a default under the financing obligations or could require CME Group to obtain waivers from its lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could have a material adverse effect on CME Group’s business, financial condition or results of operations.

CME Group stockholders’ ownership percentage will be diluted and the merger will result in dilution to earnings per share.

In connection with the merger, CME Group will issue to NYMEX Holdings stockholders shares of CME Group Class A common stock. As a result of the issuance of these shares of CME Group Class A common stock, CME Group stockholders will own a smaller percentage of CME Group after the merger than they held in CME Group prior to the merger. Based on the number of shares of common stock of CME Group and NYMEX Holdings outstanding on March 14, 2008, the last trading day prior to the public announcement of the execution of the Merger Agreement, and assuming that CME Group pays to NYMEX Holdings stockholders the mandatory cash component of the merger consideration of $3.4 billion, immediately after the completion of the merger, CME Group stockholders immediately prior to the merger will own approximately 81.4% of the common stock of CME Group and NYMEX Holdings stockholders immediately prior to the merger will own approximately 18.6% of the common stock of CME Group. The merger will also result in significant dilution to the earnings per share of CME Group prior to the merger. For more information on the dilution to CME Group’s earnings per share, see “Unaudited Pro Forma Condensed Combined Financial Information for CME Group” beginning on page 166.

CME Group Class A common stock may be affected by factors different from those affecting the price of NYMEX Holdings common stock.

Upon completion of the merger, holders of NYMEX Holdings common stock will become holders of CME Group Class A common stock. While CME Group and NYMEX Holdings operate in the same industry, certain factors may affect CME Group’s business, results of operations and the price of its Class A common stock that might not similarly affect NYMEX Holdings’ business, results of operations and the price of its common stock. For a discussion of CME Group’s and NYMEX Holdings’ businesses and certain factors to consider in connection with such businesses, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each of CME Group’s and NYMEX Holdings’ Annual Reports on Form 10-K for the year ended December 31, 2007 and other documents incorporated by reference herein.

 

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The merger may become fully taxable to NYMEX Holdings stockholders if the price of CME Group Class A common stock declines significantly and other specified actions are taken by CME Group and NYMEX Holdings.

The structure of the merger could change from a “forward” merger, where you generally would recognize gain or loss only to the extent of the cash consideration you receive in the merger, into a taxable “reverse” merger whereby Merger Sub would be merged with and into NYMEX Holdings. If the transaction were to proceed as a “reverse” merger, you would recognize gain or loss, regardless of the type of consideration received, in an amount equal to the difference between (i) the sum of the cash and the fair market value of shares of CME Group Class A common stock you receive in the merger and (ii) your adjusted basis in the shares of NYMEX Holdings common stock you exchange in the merger.

The structure will change to a taxable “reverse” merger only if:

 

•

tax counsel to either CME Group or NYMEX Holdings is unable to render an opinion at the effective time of the merger that the “forward” merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning Section 368(a) of the Code and that each of CME Group and NYMEX Holdings will be a “party to a reorganization” within the meaning of Section 368(b) of the Code; and

 

•

NYMEX Holdings elects, in its sole discretion, to restructure the proposed transaction as a taxable “reverse” merger.

In the event NYMEX Holdings elects to have the merger proceed as a “reverse” merger, CME Group may elect to increase the amount of cash consideration paid to you up to the total amount of consideration you receive in the merger.

For more detail on the tax consequences of a “reverse” merger, please refer to the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 157.

Owners of NYMEX Class A memberships are entitled to receive potential revenue payments from electronic trading, some of which could be triggered or paid before completion of the merger. NYMEX’s interpretation with respect to these revenue payment rights is subject to challenge. These rights will be eliminated if the merger is completed.

On March 13, 2006, the NYMEX Class A members voted to approve a 10% equity investment by General Atlantic LLC and certain of its affiliates, or “General Atlantic,” in NYMEX Holdings. As part of this transaction, the bylaws of NYMEX were amended and restated. Section 311(G) of the amended and restated bylaws, or “Bylaw Section 311(G),” was created to provide a potential revenue stream to owners of NYMEX Class A memberships from the electronic trading of certain NYMEX Division listed products (as so designated in the bylaws of NYMEX) for which open outcry trading either: (i) later terminated; or (ii) effectively terminated as a result of a shift to at least 90% electronic trading.

On April 23, 2008, NYMEX issued Notice to Members No. 217, explaining that, for any applicable NYMEX Division listed product, a “shift” triggering revenue payments to the owners of NYMEX Class A memberships under Bylaw Section 311(G) occurs following the end of two consecutive fiscal quarters in which, during each quarter, the average quarterly electronic trading volume has equaled or exceeded 90% of the Contract Volume in such product (the “Shift Date”). “Contract Volume” includes all NYMEX contract volume that is regularly reported by NYMEX Holdings in its quarterly financial reports, including transactions submitted for clearing via NYMEX ClearPort^® Clearing and all futures resulting from the exercise or assignment of options.

The Shift Date may occur for one or more applicable NYMEX Division listed products prior to the completion of the merger, and would result in electronic trading revenue accruals or payments to the owners of NYMEX Class A memberships. However, any right of the owners of NYMEX Class A memberships to receive

 

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such revenue payments under Bylaw Section 311(G) will be eliminated as a result of the approval of the NYMEX Amended Charter and the NYMEX Amended Bylaws by the owners of Class A Memberships as a condition to the merger. See “—Additional Risks Relating to NYMEX Class A Members” beginning on page 40.

During a recent review of documents, NYMEX discovered that, as a result of a typographical error, Appendix H of the February 10, 2006 NYMEX Class A member proxy statement materials inadvertently contained two parentheticals from an earlier internal draft of Bylaw Section 311(G). The final version, which did not include the two parentheticals, was approved and recommended to members by the NYMEX board of directors, agreed to by General Atlantic as a condition to its investment and described in the body of the February 10, 2006 NYMEX Class A member proxy statement. The two parentheticals incorrectly provided that the potential revenue payments under Bylaw Section 311(G) could apply to future products which only traded electronically. The two parentheticals, in context, read as follows: “if…at least 90% of Contract Volume of such applicable NYMEX Division product is from electronic trading (including future products which only trade electronically and therefore immediately meet this threshold) then in such case the owners of Class A memberships shall, at the time of…shift to electronic trading (including immediately upon the creation of future products which only trade electronically),” be entitled to receive the Section 311(G) revenue payments. Because the inclusion of revenue payments from new products that only trade electronically, as reflected in the two parentheticals, was rejected by General Atlantic and the NYMEX board of directors during their negotiations, a NYMEX Holdings press release dated February 7, 2006 (which was filed as additional proxy solicitation materials prior to the NYMEX Class A members’ meeting to approve the amended bylaws of NYMEX) specifically stated: “This royalty payment is limited to open outcry products for which the trading floor closes or for which 90% of the trading volume shifts to electronic trading. Trading rights owners will not be entitled to any royalty payment or trading revenue from new products that have only traded electronically.” NYMEX believes that the operative bylaws of NYMEX (which have been continuously posted on NYMEX Holdings’ website) do not contain the incorrect parentheticals and do not provide revenue payments to members for future products which only trade electronically. Any alleged payments associated with the trading revenue from new products that have only traded electronically to date would be less than $50.00 per Class A Membership.

There can be no assurance that NYMEX’s interpretation regarding Bylaw Section 311(G) will not be challenged.

Additional Risks Relating to NYMEX Class A Members

The NYMEX Amended Charter and the NYMEX Amended Bylaws will result in the elimination of substantially all of the NYMEX Class A members’ rights under the existing certificate of incorporation and bylaws of NYMEX.

In connection with the merger, the existing certificate of incorporation and bylaws of NYMEX will be amended and restated as a result of which substantially all of the rights currently held by NYMEX Class A members will be eliminated. The loss of these rights will reduce the ability of NYMEX Class A members to influence the management of NYMEX following the merger. In addition, following the merger, NYMEX Class A members will no longer constitute a majority of each of the NYMEX and NYMEX Holdings boards of directors. For additional information regarding the changes to the existing certificate of incorporation and bylaws of NYMEX in connection with the merger, see the section entitled “The Special Meeting of NYMEX Class A Members—Proposal 1—Approval of the NYMEX Amended Charter” beginning on page 54 and “The Special Meeting of NYMEX Class A Members—Proposal 2—Approval of the NYMEX Amended Bylaws” beginning on page 55.

 

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FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains or incorporates by reference a number of forward-looking statements regarding the financial condition, results of operations, earnings outlook and business prospects of CME Group and NYMEX Holdings and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions.

The forward-looking statements involve certain risks and uncertainties. The ability of either CME Group or NYMEX Holdings to predict results or actual effects of its plans and strategies, or those of the combined company after the merger, is inherently uncertain. Accordingly, actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Some of the factors that may cause actual results or earnings to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those discussed under “Risk Factors” and those discussed in the filings of each of CME Group and NYMEX Holdings that are incorporated herein by reference, as well as the following:

 

•

expected cost savings from the merger may not be fully realized within the expected time frames or at all;

 

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changes in both companies’ businesses during the period between now and the completion of the merger may have an adverse impact on CME Group and/or NYMEX Holdings;

 

•

our ability to obtain regulatory approvals of the merger on the proposed terms and schedule;

 

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the risk that the businesses of CME Group and NYMEX Holdings will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;

 

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the risk of an unfavorable judgment or ruling in the class action litigation;

 

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revenues following the merger may be lower than expected;

 

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increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities;

 

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our ability to keep pace with rapid technological developments, including our ability to complete the development and implementation of the enhanced functionality required by our customers;

 

•

our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services;

 

•

our ability to adjust our fixed costs and expenses if our revenues decline;

 

•

our ability to continue to generate revenues from our processing services;

 

•

our ability to maintain existing customers and strategic relationships and attract new ones;

 

•

our ability to expand and offer our products in foreign jurisdictions;

 

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changes in domestic and foreign regulations;

 

•

changes in government policy, including policies relating to common or directed clearing or changes as a result of the combination of the SEC and CFTC;

 

•

the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others;

 

•

our ability to generate revenue from our market data that may be reduced or eliminated by decreased demand or by the growth of electronic trading;

 

•

changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure;

 

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•

the ability of our financial safeguards package to adequately protect us from the credit risks of clearing firms;

 

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the ability of our compliance and risk management methods to effectively monitor and manage our risks;

 

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changes in price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets;

 

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economic, political and market conditions;

 

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natural disasters and other catastrophes;

 

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our ability to accommodate increases in trading volume without failure or degradation of performance of our systems;

 

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our ability to execute our growth strategy and maintain our growth effectively;

 

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our ability to manage the risks and control the costs associated with our acquisition, investment and alliance strategy;

 

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our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business;

 

•

industry and customer consolidation;

 

•

decreases in trading and clearing activity;

 

•

the imposition of a transaction tax on futures and options on futures transactions;

 

•

other risks detailed in both companies’ filings with the SEC; and

 

•

changes in the regulation of our industry as a result of a combination of the SEC and CFTC.

Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this joint proxy statement/prospectus or the date of any document incorporated by reference in this joint proxy statement/prospectus.

All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this joint proxy statement/prospectus and attributable to CME Group or NYMEX Holdings or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, CME Group and NYMEX Holdings undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this joint proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

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THE SPECIAL MEETING OF CME GROUP STOCKHOLDERS

General

This joint proxy statement/prospectus is being furnished to CME Group stockholders in connection with the solicitation of proxies by the CME Group board of directors to be used at the special meeting of CME Group stockholders to be held on [            ], 2008 at [            ], Chicago time, at [            ], Chicago, Illinois, and at any adjournment or postponement of that meeting. This joint proxy statement/prospectus and the enclosed proxy card are being sent to CME Group stockholders on or about [            ], 2008.

Purpose of the Special Meeting of CME Group Stockholders

At the special meeting of CME Group stockholders, holders of CME Group Class A and Class B common stock will be asked to consider and vote on the following proposals to:

 

•

approve the CME Group Amended Charter;

 

•

approve the Stock Issuance;

 

•

approve the adjournment of the special meeting of CME Group stockholders, if necessary, to solicit additional proxies; and

 

•

transact any other business as may properly be brought before the special meeting of CME Group stockholders or any adjournment or postponement of the special meeting of CME Group stockholders.

The approval of each of the first two proposals listed above is required for completion of the merger. The CME Group Amended Charter and the Stock Issuance will become effective only if both proposals are approved by the CME Group stockholders and the merger is completed.

Record Date and Voting

The CME Group board of directors has fixed the close of business on [            ], 2008 as the record date for determining the holders of shares of CME Group Class A and Class B common stock entitled to receive notice of and to vote at the special meeting of CME Group stockholders. Only holders of record of CME Group common stock at the close of business on that date will be entitled to vote at the special meeting of CME Group stockholders and at any adjournment or postponement of that meeting. At the close of business on the record date, there were [            ] shares of CME Group Class A common stock outstanding, held by approximately [            ] holders of record, and [            ] shares of CME Group Class B common stock outstanding, held by approximately [            ] holders of record.

Each holder of shares of CME Group Class A and Class B common stock outstanding on the record date will be entitled to one vote for each share held of record upon each matter properly submitted at the special meeting of CME Group stockholders and at any adjournment or postponement of that meeting, provided that holders of fractional shares of CME Group Class A common stock will be entitled to vote their fractional shares in proportion to their fractional interest. In order for CME Group to satisfy its quorum requirements, the holders of at least one-third of the total number of outstanding shares of CME Group common stock entitled to vote at the special meeting of CME Group stockholders must be present provided that approval of the Stock Issuance requires that the total number of votes cast on the Stock Issuance represents over 50% of the outstanding shares of CME Group Class A and Class B common stock voting together as a single class. You will be deemed to be present at the special meeting of CME Group stockholders if you attend the meeting or if you submit a proxy card (including through the Internet or telephone) that is received at or prior to the special meeting of CME Group stockholders (and not revoked as described below).

If your proxy card is properly executed and received by CME Group in time to be voted at the special meeting of CME Group stockholders, the shares represented by your proxy card (including those given through

 

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the Internet or by telephone) will be voted in accordance with the instructions that you mark on your proxy card. If you execute your proxy card but do not provide CME Group with any instructions, your shares will be voted “FOR” the approval of the CME Group Amended Charter, “FOR” the approval of the Stock Issuance and “FOR” the proposal to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies.

Vote Required

Approval of the CME Group Amended Charter requires the affirmative vote of the holders of a majority of the outstanding shares of CME Group Class A and Class B common stock voting together as a single class.

Approval of the Stock Issuance requires the affirmative vote of the holders of a majority of the shares of CME Group Class A and Class B common stock present at the meeting and entitled to vote, voting together as a single class (provided that the total number of votes cast on the Stock Issuance represents over 50% of the outstanding shares of CME Group Class A and Class B common stock, voting together as a single class).

Approval of the proposal to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies requires the affirmative vote of the holders of a majority of the total votes cast of CME Group Class A and Class B common stock voting together as a single class.

Shares of CME Group common stock as to which the “abstain” box is selected on a proxy card will be counted as present for purposes of determining whether a quorum is present. The required vote of CME Group stockholders to approve the CME Group Amended Charter is based upon the number of outstanding shares of CME Group common stock, and not the number of shares that are actually voted. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of CME Group stockholders or the abstention from voting by CME Group stockholders, or the failure of any CME Group stockholder who holds shares in “street name” through a bank or broker to give voting instructions to such bank or broker, will have the same effect as a vote “AGAINST” the CME Group Amended Charter.

The required vote of CME Group stockholders to approve the Stock Issuance is based on the number of shares that are actually voted, not on the number of outstanding shares of CME Group common stock, provided that the total number of votes cast on the Stock Issuance represents over 50% of the outstanding shares of CME Group Class A and Class B common stock, voting together as a single class. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of CME Group stockholders or the abstention from voting by CME Group stockholders, or the failure of any CME Group stockholder who holds shares in “street name” through a bank or broker to give voting instructions to such bank or broker, will have the same effect as a vote “AGAINST” such proposal, unless holders of more than 50% of all outstanding shares of CME Group Class A and Class B common stock entitled to vote on the matter, voting together as a single class, cast votes, in which event your failure to vote on the proposal will have no effect on the result of the vote.

The required vote of CME Group stockholders to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies is based on the number of shares that are actually voted, not on the number of outstanding shares of CME Group common stock. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of CME Group stockholders or the abstention from voting by CME Group stockholders, or the failure of any CME Group stockholder who holds shares in “street name” through a bank or broker to give voting instructions to such bank or broker, will have no effect on the result of the vote.

As of the record date, CME Group directors and executive officers and their affiliates had or shared the power to vote in the aggregate approximately [            ] shares of CME Group Class A and Class B common stock, representing [            ]% of the aggregate outstanding shares of CME Group Class A and Class B common stock.

 

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We have been advised that CME Group’s directors and executive officers will vote their shares of CME Group common stock “FOR” the approval of the CME Group Amended Charter, the approval of the Stock Issuance and the proposal to adjourn the special meeting of CME Group stockholders, if necessary, to solicit additional proxies, although none of them has entered into any agreement requiring them to do so.

Recommendation of the Board of Directors

As discussed elsewhere in this joint proxy statement/prospectus, the CME Group board of directors determined that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of CME Group and its stockholders and approved the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement, including the CME Group Amended Charter and the Stock Issuance. The CME Group board of directors recommends that the CME Group stockholders vote “FOR” the approval of the CME Group Amended Charter, the Stock Issuance and the adjournment of the special meeting, if necessary, to solicit additional proxies.

CME Group stockholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement and the merger. In particular, CME Group stockholders are directed to the Merger Agreement and the CME Group Amended Charter, which are attached as Annex A and Annex H, respectively, to this joint proxy statement/prospectus.

Revocability of Proxies

The presence of a CME Group stockholder at the special meeting of CME Group stockholders will not automatically revoke that CME Group stockholder’s proxy. However, a CME Group stockholder may revoke a proxy at any time prior to its exercise by:

 

•

submitting a written revocation to CME Group, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717, that is received prior to the meeting;

 

•

submitting another proxy via the Internet, by telephone or by mail that is dated later than the original proxy and that is received prior to the meeting;

 

•

attending the special meeting of CME Group stockholders and voting in person if your shares of CME Group common stock are registered in your name rather than in the name of a broker, bank or other nominee; or

 

•

if your shares of CME Group common stock are held by a broker or bank, you must follow the instructions on the form you receive from your broker or bank with respect to changing or revoking your proxy.

Attending the Special Meeting

All holders of CME Group Class A and Class B common stock at the close of business on [            ], 2008, the record date for the special meeting, are invited to attend the special meeting. If you attend, you will be asked to present valid picture identification, such as a driver’s license or passport, and, if you are not a stockholder of record, evidence from your broker or bank that you are a stockholder and are eligible to attend the meeting, such as a letter or account statement from your broker or bank. Stockholders will not be allowed to use cameras, recording devices and other electronic devices at the meeting.

Voting Electronically or by Telephone

In addition to voting by submitting your proxy card by mail, CME Group stockholders of record and many stockholders who hold their shares of CME Group common stock through a broker or bank will have the option to submit their proxy electronically through the Internet or by telephone. Please note that there are separate arrangements for using the Internet and telephone depending on whether your shares are registered in CME Group’s stock records in your name or in the name of a broker, bank or other holder of record. If you hold your shares through a broker, bank or other holder of record, you should check your proxy card and voting instructions forwarded by your broker, bank or other holder of record to see which options are available.

 

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CME Group stockholders of record may submit their proxies:

 

•

through the Internet by visiting www.proxyvote.com and following the instructions; or

 

•

by telephone by calling the toll-free number (800) 690-6903 on a touch-tone phone and following the recorded instructions.

If you vote your proxy over the Internet or by telephone, you must do so before 10:59 P.M., Chicago time, the day before the special meeting. If you hold your shares through a bank, broker, custodian or other recordholder, you may be subject to additional timing requirements. Please refer to the information forwarded by your bank, broker, custodian or other recordholder.

Solicitation of Proxies

In addition to solicitation by mail, directors, officers and employees of CME Group may solicit proxies for the special meeting of CME Group stockholders from CME Group stockholders personally or by telephone and other electronic means. However, they will not be paid for soliciting such proxies. CME Group also will provide persons, firms, banks and corporations holding shares in their names or in the names of nominees, which in either case are beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for their expenses in taking such actions. CME Group has also made arrangements with Innisfree M&A Incorporated to assist in soliciting proxies and has agreed to pay them $25,000, plus reasonable expenses, for these services. CME Group and NYMEX Holdings will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus.

Proposal 1—Approval of the CME Group Amended Charter

The Merger Agreement provides that, concurrently with the effective time of the merger, the existing certificate of incorporation of CME Group be amended and restated in the form of the CME Group Amended Charter attached to the Merger Agreement.

The CME Group Amended Charter amends and restates the existing certificate of incorporation of CME Group to:

 

•

increase the maximum size of the CME Group board of directors from 30 to 33 directors;

 

•

specify that the number of CME Group directors is to be fixed exclusively by one or more resolutions adopted by the CME Group board of directors, which number may be no more than 33; and

 

•

require the approval of a majority of the directors then in office, which must include a majority of CME Directors and CBOT Directors (in each case, as so designated in the current certificate of incorporation of CME Group in connection with the merger of CME Holdings and CBOT Holdings), to amend the provisions of the certificate of incorporation of CME Group regarding the number, classification and removal of directors and filling of vacancies and the CME/CBOT product trading requirements, during the period ending with the CME Group annual meeting of stockholders to be held in 2012.

See “The Merger—CME Group Amended Charter and CME Group Amended Bylaws” beginning on page 129. A copy of the CME Group Amended Charter to be voted upon at the special meeting is also attached to this joint proxy statement/prospectus as Annex H. You are urged to read the proposed CME Group Amended Charter included as Annex H carefully before voting on this proposal. The CME Group Amended Charter will become effective at the effective time of the merger.

The CME Group board of directors recommends a vote “FOR” the approval of the CME

Group Amended Charter.

 

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Proposal 2—Approval of the Stock Issuance

It is a condition to completion of the merger that the shares of CME Group Class A common stock to be issued to NYMEX Holdings stockholders in the merger be approved for listing on the Nasdaq and the NYSE, upon official notice of issuance. Pursuant to Rule 4350(i) of the NASDAQ Manual and Rule 312.03 of the NYSE Listed Company Manual, as a prerequisite to listing approval in each exchange, a company is required to obtain stockholder approval prior to the issuance of common stock if the common stock to be issued has voting power in the aggregate equal to or in excess of 20% of the voting power outstanding before such issuance of common stock or if the number of shares of common stock to be issued in the aggregate equals or exceeds 20% of the number of shares of common stock outstanding before the issuance of the common stock. If the merger is completed, CME Group will issue approximately 12.5 million shares of CME Group Class A common stock in the merger. Because the aggregate number of shares of CME Group Class A common stock to be issued in the merger will exceed 20% of the shares of CME Group Class A common stock outstanding on the record date for the special meeting of CME Group stockholders, under the rules of Nasdaq and the NYSE, CME Group must obtain the approval of CME Group stockholders prior to the Stock Issuance.

The CME Group board of directors recommends a vote “FOR” approval of the Stock

Issuance.

Proposal 3—Possible Adjournment of the Special Meeting of CME Group Stockholders

The special meeting of CME Group stockholders may be adjourned, if necessary, to solicit additional proxies in favor of the proposals to approve the CME Group Amended Charter and the Stock Issuance.

The CME Group board of directors recommends a vote “FOR” this proposal.

Other Matters to Come before the CME Group Special Meeting

No other matters are intended to be brought before the meeting by CME Group, and CME Group does not know of any matters to be brought before the meeting by others. If, however, any other matters properly come before the meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the judgment of management on any such matter.

 

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THE SPECIAL MEETING OF NYMEX HOLDINGS STOCKHOLDERS

General

This joint proxy statement/prospectus is being furnished to NYMEX Holdings stockholders in connection with the solicitation of proxies by the NYMEX Holdings board of directors to be used at the special meeting of NYMEX Holdings stockholders to be held on [            ], 2008, at [            ], New York time, at [            ], [            ], New York, New York, and at any adjournment or postponement of that meeting. This joint proxy statement/prospectus and the enclosed proxy card are being sent to NYMEX Holdings stockholders on or about [            ].

Purpose of the Special Meeting of NYMEX Holdings Stockholders

At the special meeting of NYMEX Holdings stockholders, NYMEX Holdings stockholders will be asked to consider and vote on the following proposals to:

 

•

adopt the Merger Agreement and thereby approve the merger;

 

•

approve the adjournment of the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies; and

 

•

transact any other business as may properly be brought before the special meeting of NYMEX Holdings stockholders or any adjournment or postponement of the special meeting of NYMEX Holdings stockholders.

The approval of the first proposal listed above is required for completion of the merger.

Record Date and Voting

The NYMEX Holdings board of directors has fixed the close of business on [            ], 2008 as the record date for determining the NYMEX Holdings stockholders entitled to receive notice of and to vote at the special meeting of NYMEX Holdings stockholders. Only NYMEX Holdings stockholders of record at the close of business on that date will be entitled to vote at the special meeting of NYMEX Holdings stockholders and at any adjournment or postponement of that meeting. At the close of business on the record date, there were [            ] shares of NYMEX Holdings common stock outstanding, held by approximately [            ] holders of record.

Each holder of shares of NYMEX Holdings common stock outstanding on the record date will be entitled to one vote for each share held of record upon each matter properly submitted at the special meeting of NYMEX Holdings stockholders and at any adjournment or postponement of that meeting. In order for NYMEX Holdings to satisfy its quorum requirements, the holders of at least one-third of the total number of outstanding shares of NYMEX Holdings common stock entitled to vote at the special meeting of NYMEX Holdings stockholders must be present. You will be deemed to be present if you attend the meeting or if you submit a proxy card (including through the Internet or by telephone) that is received at or prior to the special meeting of NYMEX Holdings stockholders (and not revoked as described below). IF YOU ARE A NYMEX CLASS A MEMBER AS WELL AS A NYMEX HOLDINGS STOCKHOLDER, YOU MUST VOTE SEPARATELY AT THE SPECIAL MEETING OF NYMEX CLASS A MEMBERS IN YOUR CAPACITY AS A NYMEX CLASS A MEMBER AND AT THE SPECIAL MEETING OF NYMEX HOLDINGS STOCKHOLDERS IN YOUR CAPACITY AS A NYMEX HOLDINGS STOCKHOLDER.

If your proxy card is properly executed and received by NYMEX Holdings in time to be voted at the special meeting of NYMEX Holdings stockholders, the shares represented by your proxy card (including those given through the Internet or by telephone) will be voted in accordance with the instructions that you mark on your proxy card. If you execute your proxy card but do not provide NYMEX Holdings with any instructions, your shares will be voted “FOR” the adoption of the Merger Agreement and “FOR” the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies.

 

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Vote Required

The adoption of the Merger Agreement requires the affirmative vote of the holders of a majority of the outstanding shares of NYMEX Holdings common stock. Approval of any proposal to adjourn the meeting, if necessary, for the purpose of soliciting additional proxies may be obtained by the affirmative vote of the holders of a majority of the votes cast at the special meeting of NYMEX Holdings stockholders. Shares of NYMEX Holdings common stock as to which the “abstain” box is selected on a proxy card will be counted as present for purposes of determining whether a quorum is present. The required vote of NYMEX Holdings stockholders on the Merger Agreement is based upon the number of outstanding shares of NYMEX Holdings common stock, and not the number of shares that are actually voted. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of NYMEX Holdings stockholders or the abstention from voting by NYMEX Holdings stockholders, or the failure of any NYMEX Holdings stockholder who holds shares in “street name” through a bank or broker to give voting instructions to such bank or broker, will have the same effect as a vote “AGAINST” the adoption of the Merger Agreement. The required vote of NYMEX Holdings stockholders to approve the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies is based on the number of shares that are actually voted, not on the number of outstanding shares of NYMEX Holdings common stock. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of NYMEX Holdings stockholders or the abstention from voting by NYMEX Holdings stockholders, or the failure of any NYMEX Holdings stockholder who holds shares in “street name” through a bank or broker to give voting instructions to such bank or broker, will have no effect on the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies.

As of the record date, NYMEX Holdings directors and executive officers and their affiliates had or shared the power to vote in the aggregate approximately [            ] shares of NYMEX Holdings common stock, representing approximately [            ]% of the outstanding shares of NYMEX Holdings common stock. Upon the execution of the Merger Agreement, CME Group entered into voting and support agreements with the General Atlantic Parties, James E. Newsome, President and Chief Executive Officer of NYMEX Holdings, and Richard M. Schaeffer, Executive Chairman of the NYMEX Holdings board of directors. Pursuant to these voting and support agreements, the General Atlantic Parties, Dr. Newsome and Mr. Schaeffer have agreed to vote their shares of NYMEX Holdings common stock in favor of the merger.

We have been advised that NYMEX Holdings directors and executive officers will vote their shares of NYMEX Holdings common stock “FOR” the adoption of the Merger Agreement and the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies.

Recommendation of the Board of Directors

As discussed elsewhere in this joint proxy statement/prospectus, the NYMEX Holdings board of directors unanimously determined that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of NYMEX Holdings and its stockholders, and unanimously approved the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement. The NYMEX Holdings board of directors unanimously recommends that the NYMEX Holdings stockholders vote “FOR” the adoption of the Merger Agreement and the proposal to adjourn the special meeting of NYMEX Holdings stockholders, if necessary, to solicit additional proxies.

The NYMEX Holdings board of directors did not make any recommendation as to whether or to what extent any NYMEX Holdings stockholder should elect cash or stock consideration in the merger. NYMEX Holdings stockholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement and the merger. In particular, NYMEX Holdings stockholders are directed to the Merger Agreement, which is attached as Annex A to this joint proxy statement/prospectus.

 

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Revocability of Proxies

The presence of a NYMEX Holdings stockholder at the special meeting of NYMEX Holdings stockholders will not automatically revoke that NYMEX Holdings stockholder’s proxy. However, a NYMEX Holdings stockholder may revoke a proxy at any time prior to its exercise by:

 

•

submitting a written revocation to NYMEX Holdings c/o the office of the Corporate Secretary located at NYMEX Holdings, Inc., One North End Avenue, Suite 1548, New York, New York 10282-1101, Attention: Donna Talamo, Corporate Secretary, that is received prior to the meeting;

 

•

submitting another proxy via the Internet, by telephone or by mail that is dated later than the original proxy and that is received prior to the meeting; or

 

•

attending the special meeting of NYMEX Holdings stockholders and voting in person if your shares of NYMEX Holdings common stock are registered in your name rather than in the name of a broker, bank or other nominee.

If your shares of NYMEX Holdings common stock are held by a broker or bank, you must follow the instructions on the form you receive from your broker or bank with respect to changing or revoking your proxy.

Attending the Special Meeting

All NYMEX Holdings stockholders at the close of business on [            ], 2008, the record date for the special meeting, are invited to attend the special meeting. If you attend, you will be asked to present valid picture identification, such as a driver’s license or passport, and, if you are not a stockholder of record, evidence from your broker or bank that you are a stockholder and are eligible to attend the meeting, such as a letter or account statement from your broker or bank. Stockholders will not be allowed to use cameras, recording devices and other electronic devices at the meeting.

Voting Electronically or by Telephone

In addition to voting by submitting your proxy card by mail, NYMEX Holdings stockholders of record and many stockholders who hold their shares of NYMEX Holdings common stock through a broker or bank will have the option to submit their proxy electronically through the Internet or by telephone. Please note that there are separate arrangements for using the Internet and telephone depending on whether your shares are registered in NYMEX Holdings’ stock records in your name or in the name of a broker, bank or other holder of record. If you hold your shares through a broker, bank or other holder of record, you should check your proxy and voting instructions forwarded by your broker, bank or other holder of record to see which options are available.

NYMEX Holdings stockholders of record may submit their proxies:

 

•

through the Internet by visiting www.cesvote.com and following the instructions; or

 

•

by telephone by calling the toll-free number (888) 693-8683 on a touch-tone phone and following the recorded instructions.

If you vote your proxy over the Internet or by telephone, you must do so before 6:00 A.M., New York time, on the meeting date. If you hold your shares through a bank, broker, custodian or other recordholder, you may be subject to additional timing requirements. Please refer to the information forwarded by your bank, broker, custodian or other recordholder.

 

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Solicitation of Proxies

In addition to solicitation by mail, directors, officers and employees of NYMEX Holdings may solicit proxies for the special meeting of NYMEX Holdings stockholders from NYMEX Holdings stockholders personally or by telephone and other electronic means. However, they will not be paid for soliciting such proxies. NYMEX Holdings also will provide persons, firms, banks and corporations holding shares in their names or in the names of nominees, which in either case are beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for their expenses in taking such actions. NYMEX Holdings and NYMEX have also made arrangements with D.F. King & Co., Inc. to assist in soliciting proxies at a monthly fee estimated between $12,500 and $20,000, plus reasonable expenses, for these services. NYMEX Holdings and CME Group will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus.

Proposal 1—Adoption of the Merger Agreement

As discussed elsewhere in this joint proxy statement/prospectus, NYMEX Holdings is asking its stockholders to approve the proposal to adopt the Merger Agreement. NYMEX Holdings stockholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement and the merger. In particular, NYMEX Holdings stockholders are directed to the Merger Agreement, which is attached as Annex A to this joint proxy statement/prospectus. See “The Merger Agreement” beginning on page 135.

The NYMEX Holdings board of directors unanimously recommends a vote “FOR”

the adoption of the Merger Agreement.

Proposal 2—Possible Adjournment of the Special Meeting of NYMEX Holdings Stockholders

The special meeting of NYMEX Holdings stockholders may be adjourned, if necessary, to solicit additional proxies in favor of the proposal to adopt the Merger Agreement.

The NYMEX Holdings board of directors unanimously recommends a vote “FOR” this proposal.

Other Matters to Come before the Special Meeting of NYMEX Holdings Stockholders

No other matters are intended to be brought before the meeting by NYMEX Holdings, and NYMEX Holdings does not know of any matters to be brought before the meeting by others. If, however, any other matters properly come before the meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the judgment of the board of directors on any such matter.

 

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THE SPECIAL MEETING OF NYMEX CLASS A MEMBERS

General

This joint proxy statement/prospectus is being furnished to NYMEX Class A members in connection with the solicitation of proxies by the NYMEX board of directors to be used at the special meeting of NYMEX Class A members to be held on [            ], 2008, at [            ], New York time, at [            ], [            ], New York, New York, and at any adjournment or postponement of that meeting. This joint proxy statement/prospectus and the enclosed proxy card are being sent to NYMEX Class A members on or about [            ].

Purpose of the Special Meeting of NYMEX Class A Members

At the special meeting of NYMEX Class A members, NYMEX Class A members will be asked to consider and vote on the following proposals to:

 

•

approve the NYMEX Amended Charter;

 

•

approve the NYMEX Amended Bylaws;

 

•

approve the adjournment of the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies; and

 

•

transact any other business as may properly be brought before the special meeting of NYMEX Class A members or any adjournment or postponement of the special meeting of NYMEX Class A members.

The approval of each of the first two proposals listed above is required for completion of the merger. The NYMEX Amended Charter and the NYMEX Amended Bylaws will become effective only if both proposals are approved by the NYMEX Class A members and the merger is completed.

Record Date and Voting

The NYMEX board of directors has fixed the close of business on [            ], 2008 as the record date for determining the holders of NYMEX Class A memberships entitled to receive notice of and to vote at the special meeting of NYMEX Class A members. Only holders of record of NYMEX Class A memberships at the close of business on that date will be entitled to vote at the special meeting of NYMEX Class A members and at any adjournment or postponement of that meeting. At the close of business on the record date, there were 816 NYMEX Class A memberships outstanding, held by approximately [            ] holders of record.

Each holder of a NYMEX Class A membership on the record date will be entitled to one vote for each NYMEX Class A membership held of record upon each matter properly submitted at the special meeting of NYMEX Class A members and at any adjournment or postponement of that meeting. In order for NYMEX to satisfy its quorum requirements, the holders of at least one-third of the total number of outstanding NYMEX Class A memberships entitled to vote at the special meeting of NYMEX Class A members must be present. You will be deemed to be present if you attend the meeting or if you submit a proxy card (including through the Internet or by telephone) that is received at or prior to the NYMEX special meeting (and not revoked as described below). IF YOU ARE A NYMEX HOLDINGS STOCKHOLDER AS WELL AS A NYMEX CLASS A MEMBER, YOU MUST VOTE SEPARATELY IN PERSON OR BY PROXY AT THE SPECIAL MEETING OF NYMEX HOLDINGS STOCKHOLDERS IN YOUR CAPACITY AS A NYMEX HOLDINGS STOCKHOLDER AND IN PERSON OR BY PROXY AT THE SPECIAL MEETING OF NYMEX CLASS A MEMBERS IN YOUR CAPACITY AS A NYMEX CLASS A MEMBER. IF YOU WISH TO SELL YOUR NYMEX CLASS A MEMBERSHIP IN THE MEMBERSHIP PURCHASE OFFER, YOU MUST ALSO RETURN YOUR EXECUTED MEMBERSHIP PURCHASE AGREEMENT IN YOUR CAPACITY AS A NYMEX CLASS A MEMBER. IF YOU HOLD A NYMEX CLASS A MEMBERSHIP, YOU SHOULD REFER TO THE MEMBERSHIP PURCHASE OFFER DOCUMENTS MAILED TO YOU UNDER SEPARATE COVER FOR IMPORTANT INFORMATION AND INSTRUCTIONS ON HOW TO COMPLETE AND RETURN YOUR MEMBERSHIP PURCHASE OFFER DOCUMENTS.

 

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If your proxy card is properly executed and received by NYMEX in time to be voted at the special meeting of NYMEX Class A members, the NYMEX Class A membership(s) represented by your proxy card (including those given through the Internet or by telephone) will be voted in accordance with the instructions that you mark on your proxy card. If you execute your proxy card but do not provide NYMEX with any instructions, your NYMEX Class A membership(s) will be voted “FOR” the approval of the NYMEX Amended Charter, “FOR” the approval of the NYMEX Amended Bylaws and “FOR” the proposal to adjourn the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies.

Vote Required

Approval of the NYMEX Amended Charter and approval of the NYMEX Amended Bylaws require the affirmative vote of the holders of 75% of the outstanding NYMEX Class A memberships. Approval of any proposal to adjourn the meeting, if necessary, for the purpose of soliciting additional proxies may be obtained by the affirmative vote of the holders of a majority of the votes cast at the special meeting of NYMEX Class A members. NYMEX Class A memberships as to which the “abstain” box is selected on a proxy card will be counted as present for purposes of determining whether a quorum is present. The required vote of NYMEX Class A members to approve the NYMEX Amended Charter and the NYMEX Amended Bylaws is based upon the number of outstanding NYMEX Class A memberships, and not the number of NYMEX Class A memberships that are actually voted. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of NYMEX Class A members or the abstention from voting by NYMEX Class A members will have the same effect as a vote “AGAINST” the approval of the NYMEX Amended Charter and the NYMEX Amended Bylaws. The required vote of NYMEX Class A members to approve the proposal to adjourn the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies is based on the number of memberships that are actually voted, not the number of outstanding NYMEX Class A memberships. Accordingly, the failure to submit a proxy card or to vote by Internet, telephone or in person at the special meeting of NYMEX Class A members or the abstention from voting by NYMEX Class A members will have no effect on the proposal to approve the proposal adjourn the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies.

As of the record date, NYMEX directors and executive officers and their affiliates had or shared the power to vote in the aggregate approximately [            ] NYMEX Class A memberships, representing approximately [            ]% of the outstanding NYMEX Class A memberships.

CME Group entered into voting and support agreements with the General Atlantic Parties, James E. Newsome, President and Chief Executive Officer of NYMEX Holdings, and Richard M. Schaeffer, Executive Chairman of the NYMEX Holdings board of directors. Pursuant to these voting and support agreements, the General Atlantic Parties, Dr. Newsome and Mr. Schaeffer have agreed to vote their shares of NYMEX Holdings common stock in favor of the merger and Mr. Schaeffer has agreed to vote, or cause to be voted, the NYMEX Class A membership owned by him for the approval of the NYMEX Amended Charter and the NYMEX Amended Bylaws and to sell his NYMEX Class A membership in the membership purchase offer.

We have been advised that NYMEX directors and executive officers will vote their NYMEX Class A memberships “FOR” the approval of the NYMEX Amended Charter, the NYMEX Amended Bylaws and the proposal to adjourn the special meeting of NYMEX Class A members, if necessary, to solicit additional proxies.

 

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Revocability of Proxies

The presence of a NYMEX Class A member at the special meeting of NYMEX Class A members will not automatically revoke that NYMEX Class A member’s proxy. However, a NYMEX Class A member may revoke a proxy at any time prior to its exercise by:

 

•

submitting a written revocation to NYMEX c/o the office of the Corporate Secretary located at NYMEX Holdings, Inc., One North End Avenue, Suite 1548, New York, New York 10282-1101, Attention: Donna Talamo, Corporate Secretary, that is received prior to the meeting;

 

•

submitting another proxy by telephone, via the Internet or by mail that is dated later than the original proxy and that is received prior to the meeting; or

 

•

attending the special meeting of NYMEX Class A members and voting in person.

Attending the Special Meeting

All holders of NYMEX Class A memberships at the close of business on [            ], 2008, the record date for the special meeting, are invited to attend the special meeting. If you attend, you will be asked to present valid picture identification, such as a driver’s license or passport. NYMEX Class A members will not be allowed to use cameras, recording devices and other electronic devices at the meeting.

Voting Electronically or by Telephone

In addition to voting by submitting your proxy card by mail, NYMEX Class A members of record will have the option to submit their proxy electronically through the Internet or by telephone.

NYMEX Class A members of record may submit their proxies:

 

•

through the Internet by visiting www.cesvote.com and following the instructions; or

 

•

by telephone by calling the toll-free number (888) 693-8683 on a touch-tone phone and following the recorded instructions.

If you vote your proxy over the Internet or by telephone, you must do so before 6:00 A.M., New York time, on the meeting date.

Solicitation of Proxies

In addition to solicitation by mail, directors, officers and employees of NYMEX may solicit proxies for the special meeting of NYMEX Class A members from NYMEX Class A members personally or by telephone and other electronic means. However, they will not be paid for soliciting such proxies. NYMEX Holdings and NYMEX have also made arrangements with D.F. King & Co., Inc. to assist in soliciting proxies at a monthly fee estimated between $12,500 and $20,000, plus reasonable expenses, for these services. NYMEX Holdings and CME Group will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus.

Proposal 1—Approval of the NYMEX Amended Charter

The Merger Agreement provides that, concurrently with the effective time of the merger, the existing certificate of incorporation of NYMEX be amended and restated in the form attached to the Merger Agreement. The NYMEX Amended Charter amends the existing certificate of incorporation of NYMEX to eliminate substantially all of the rights currently held by NYMEX Class A members under the existing certificate of incorporation of NYMEX.

A copy of the NYMEX Amended Charter to be voted upon at the special meeting is attached to this joint proxy statement/prospectus as Annex J. You are urged to read the following summary and the proposed NYMEX Amended Charter included as Annex J, carefully before voting on this proposal.

 

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The proposed NYMEX Amended Charter of NYMEX, which will be effective immediately following the merger:

 

•

reduces the number of NYMEX Class A memberships from 816 to not more than 204;

 

•

eliminates the restriction on the NYMEX board of directors that prohibits it from creating new classes of memberships in NYMEX that have greater voting rights than the NYMEX Class A memberships;

 

•

eliminates all voting rights of NYMEX Class A members to amend the certificate of incorporation of NYMEX and grants the exclusive power to amend the certificate of incorporation to the NYMEX board of directors and the NYMEX Class B member, acting together;

 

•

eliminates all voting rights of NYMEX Class A members to amend the bylaws of NYMEX and grants the exclusive power to amend the bylaws of NYMEX to both the NYMEX board of directors and the NYMEX Class B member, acting separately;

 

•

provides that the NYMEX board of directors holds the exclusive power to amend the NYMEX Rulebook;

 

•

provides that the NYMEX Class B member holds the exclusive right to vote on any matter over which the NYMEX members have a right to vote; and

 

•

eliminates the requirement that the NYMEX board of directors (and the chairman and vice chairman thereof) be identical to the NYMEX Holdings board of directors (and the chairman and vice chairman thereof) and grants the exclusive power to select the board of directors to the NYMEX Class B member.

The NYMEX Amended Charter will become effective at the effective time of the merger. The approval of Proposal 1 and Proposal 2 is required for completion of the merger.

Proposal 2—Approval of the NYMEX Amended Bylaws

The Merger Agreement provides that, concurrently with the effective time of the merger, the bylaws of NYMEX are to be amended and restated in the form attached to the Merger Agreement. The NYMEX Amended Bylaws amend the existing bylaws of NYMEX in a number of important respects, eliminating substantially all of the rights currently held by NYMEX Class A members under the bylaws of NYMEX.

A copy of the NYMEX Amended Bylaws to be voted upon at the special meeting is attached to this joint proxy statement/prospectus as Annex K. You are urged to read the following summary and the NYMEX Amended Bylaws, included as Annex K, carefully before voting on this proposal.

The proposed NYMEX Amended Bylaws, which will be effective immediately following the merger:

 

•

reduce the number of NYMEX Class A memberships from 816 to not more than 204;

 

•

eliminate all voting rights of NYMEX Class A members, including the right to vote on amendments to Special Matters, as described below;

 

•

eliminate all of the following “Special Matters,” as so designated in the bylaws of NYMEX:

 

•

the requirement that NYMEX Class A members approve the elimination or limitation of the products a NYMEX Class A member may trade;

 

•

the requirement that NYMEX Class A members approve elimination or suspension of, or restrictions on, open outcry trading, with certain exceptions;

 

•

the requirement that NYMEX Class A members approve changes in the number of NYMEX Class A memberships;

 

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•

the requirement that NYMEX Class A members approve any new category of fees or charges generally applicable to NYMEX Class A members, and for “Core Products,” as defined in the bylaws of NYMEX, fees for obtaining additional electronic trading privileges, with certain exceptions;

 

•

the requirement that NYMEX Class A members approve the issuance of trading permits for open outcry products;

 

•

the requirement that NYMEX Class A members approve certain changes to the membership, eligibility or capital requirements to become a NYMEX Class A member, member firm or clearing member, to lease a NYMEX Class A membership or exercise associated trading or clearing rights or privileges;

 

•

the requirement that NYMEX Class A members approve certain changes in open outcry trading hours;

 

•

the requirement that NYMEX Class A members approve changes to NYMEX’s procedure and mechanism for setting margin requirements;

 

•

the right of NYMEX Class A members to request that NYMEX offer new products that are traded electronically to be traded via open outcry;

 

•

the requirement that NYMEX Class A members approve certain changes to the eligibility criteria and composition of certain committees of the NYMEX board of directors;

 

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the requirement that NYMEX Class A members approve any transaction the result of which is that the NYMEX clearinghouse will no longer be wholly-owned by NYMEX;

 

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the requirement that NYMEX Class A members approve any change to the number of electronic trading privileges per NYMEX Class A membership;

 

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the right of NYMEX Class A members to receive a share of the revenues NYMEX earns from electronic trading of certain NYMEX products, subject to certain thresholds being met; and

 

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the right of NYMEX Class A members to receive a share of the fees charged by NYMEX to participants in the NYMEX miNYTM Designee Program for NYMEX miNYs traded via open outcry, for so long as the NYMEX miNY Designee Program exists;

 

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eliminate the procedure for disputes regarding an alleged violation of a Special Matter that requires such dispute to be submitted to mandatory and binding arbitration, and upon the petition of a majority of NYMEX Class A memberships, NYMEX to advance to the NYMEX Class A members reasonable out-of-pocket expenses related to such dispute;

 

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eliminate the protections for open outcry trading as provided in the bylaws;

 

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eliminate the right of NYMEX Class A members to demand a special meeting by written ballot of at least 10% of the NYMEX Class A members;

 

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provide no right for NYMEX Class A members to attend any annual or special meeting of NYMEX Class A members;

 

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provide that NYMEX Class A members hold the right to trade on NYMEX via open outcry only on the NYMEX Class A members’ own account as governed by the NYMEX Rulebook, and subject to fees no lower than those paid by permit holders or other persons with trading privileges;

 

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provide that NYMEX Class A members specifically do not have the right to (i) vote on any matter, (ii) trade on NYMEX via open outcry except as specified in the NYMEX Amended Bylaws of NYMEX, (iii) clear contracts or confer the right to become a clearing member on an entity, (iv) have any interests in the profits of NYMEX or any distribution by NYMEX, (v) become a member of the NYMEX board of directors, (vi) lease a NYMEX Class A membership or (vii) adopt, amend or repeal the NYMEX Rulebook;

 

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provide that the NYMEX Class B member holds the right to elect the NYMEX board of directors;

 

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provide that the NYMEX board of directors holds the right to choose officers of NYMEX, including the chairman;

 

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provide that the NYMEX board of directors and the NYMEX Class B member, acting separately, hold the exclusive right to amend the bylaws; and

 

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provide that the power to adopt, amend and repeal the NYMEX Rulebook is vested exclusively in the NYMEX board of directors and the NYMEX Class B member.

The NYMEX Amended Bylaws will become effective at the effective time of the merger. The approval of Proposal 1 and Proposal 2 is required for completion of the merger.

Proposal 3—Possible Adjournment of the Special Meeting of NYMEX Class A Members

The special meeting of NYMEX Class A members may be adjourned, if necessary, to solicit additional proxies in favor of the proposals to approve the NYMEX Amended Charter and NYMEX Amended Bylaws.

Other Matters to Come before the Special Meeting of NYMEX Class A Members

No other matters are intended to be brought before the meeting by NYMEX, and NYMEX does not know of any matters to be brought before the meeting by others. If, however, any other matters properly come before the meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the judgment of the board of directors on any such matter.

 

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THE MERGER

The terms and conditions of the merger are contained in the Merger Agreement, which is attached as Annex A to this joint proxy statement/prospectus. Please carefully read the Merger Agreement in its entirety, as it is the legal document that governs the merger.

Background of the Merger

For the past several years, the global derivatives industry has experienced an increase in consolidation and competition. The management and boards of directors of each of CME Group and NYMEX Holdings, as part of the ongoing evaluation of their respective businesses and in light of the evolving changes in the industry, have regularly reviewed and considered a variety of strategic options and commercial opportunities, both in the exchange-traded and over-the-counter derivatives markets. As part of such review, CME Group and NYMEX Holdings entered into a partnership in April 2006 whereby CME Group agreed to provide electronic trading for NYMEX Holdings’ energy and metals futures contracts on its CME Globex electronic trading platform, thereby expanding access to NYMEX Holdings’ products around the world.

In connection with its periodic evaluation of NYMEX Holdings’ business and changes in the global derivatives industry, including the increase in consolidation and competition, the board of directors of NYMEX Holdings from time-to-time has considered, and has had preliminary discussions with various parties with respect to, strategic transactions, including business combinations, involving NYMEX Holdings. During the summer of 2007, representatives of NYMEX Holdings had discussions with various parties regarding a potential combination or other strategic transaction of such parties and NYMEX Holdings. These discussions did not result in an offer from any of the parties.

Continuing to assess strategic alternatives to remain competitive in the current environment and enhance stockholder value, during the months of July and August 2007, CME Group evaluated various prospective strategic opportunities, including the expansion of its existing commercial relationship with NYMEX Holdings. On July 31, 2007, members of CME Group’s and NYMEX Holdings’ senior management held a meeting in New York, New York to discuss their preliminary assessment of additional commercial arrangements between the two companies and the possibility of furthering their relationship through a strategic transaction. No agreement was reached at the meeting.

On August 21, 2007, NYMEX Holdings issued a press release disclosing that NYMEX Holdings had preliminary discussions with several parties regarding a potential business combination between such parties and NYMEX Holdings, but noting that such discussions were preliminary and that there was no assurance that NYMEX Holdings would enter into any transaction and, if it were to enter into a transaction, the timing or terms of such transaction.

On September 4, 2007, Mr. Terrence A. Duffy, Executive Chairman of the CME Group board of directors, and Mr. Craig S. Donohue, Chief Executive Officer of CME Group, advised Mr. Richard Schaeffer, Executive Chairman of the NYMEX Holdings board of directors, and Dr. James E. Newsome, President and Chief Executive Officer of NYMEX Holdings, that CME Group was not prepared to continue exploring a potential transaction with NYMEX Holdings at that time.

On September 10, 2007, the CME Group board of directors held a meeting during which members of CME Group’s management reviewed with the board the then current state of the global derivatives industry and various prospective strategic opportunities, including commercial arrangements, minority investments, joint ventures and business combinations with several potential domestic and international partners, including NYMEX Holdings. At the meeting, management discussed with the board the rationale and special considerations associated with each alternative, such as alignment with CME Group’s strategy, underlying business fundamentals, value creation potential and achievability.

 

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On December 5, 2007, the CME Group board of directors held a regular meeting during which it discussed the continuing trend towards consolidation in the global derivatives industry and considered potential strategies for further globalization and expansion of CME Group’s business, including through leveraging its technology and growing its core strengths. With representatives of Skadden, Arps, Slate, Meagher & Flom LLP, or “Skadden, Arps,” CME Group’s outside legal counsel, present at the meeting, CME Group’s board of directors discussed the potential benefits and drawbacks of pursuing long-term strategic opportunities and investments to expand CME Group’s range of product offerings and strengthen CME Group’s competitive position in domestic and international markets.

On December 13, 2007, Mr. Donohue revisited with other members of CME Group’s management the potential benefits of a business combination with NYMEX Holdings, given NYMEX Holdings’ strong position in the energy and metals futures markets and the highly complementary nature of NYMEX Holdings’ product offerings relative to CME Group’s benchmark products. After considering the preliminary analysis of NYMEX Holdings’ business conducted earlier in the year, CME Group’s management decided to evaluate further the merits of a potential transaction with NYMEX Holdings with the assistance of CME Group’s financial and legal advisors.

Throughout the month of December 2007, CME Group’s management held various meetings with Lehman Brothers and William Blair, CME Group’s financial advisors, to discuss and analyze a potential transaction with NYMEX Holdings. During these meetings, CME Group’s management participated in extensive discussions with CME Group’s financial advisors about seeking opportunities for the company to compete more effectively on a global scale by diversifying further its product offerings and realizing significant cost and revenue synergies through the acquisition of an exchange with complementary strengths, such as NYMEX Holdings. At this time, CME Group commenced a preliminary due diligence review of NYMEX Holdings’ publicly available information.

In light of the discussions between CME Group and its financial advisors, the results of CME Group’s preliminary due diligence review of NYMEX Holdings’ publicly available information and the previous discussions between CME Group and NYMEX Holdings, in late December 2007, Messrs. Duffy and Donohue contacted Mr. Schaeffer and Dr. Newsome to advise them of CME Group’s interest in pursuing a potential transaction with NYMEX Holdings.

On January 7, 2008, CME Group and NYMEX Holdings executed a confidentiality agreement to facilitate the preliminary discussions and consideration of a potential transaction between the parties.

On January 8, 2008, CME Group’s management requested certain due diligence materials from NYMEX Holdings. With assistance from its legal and financial advisors, CME Group also continued its due diligence review of NYMEX Holdings’ publicly available information. On January 9, 2008, NYMEX Holdings requested certain non-public information from CME Group to conduct due diligence and began reviewing publicly available information regarding CME Group.

From January 14, 2008 through January 16, 2008, members of CME Group’s management held several meetings to discuss the strategic fit and potential benefits of a transaction with NYMEX Holdings to CME Group and its stockholders, and to consider other issues relating to a potential transaction, including deal structure, consideration payable to NYMEX Holdings stockholders, post-closing governance matters, trading rights of the NYMEX Class A members, trading floor and building utilization options and antitrust and other regulatory matters. At these meetings, representatives of Skadden, Arps provided advice with respect to certain matters. In addition, CME Group’s management considered and discussed with CME Group’s financial advisors various detailed financial analyses relating to the potential transaction, including their summary financial analyses, discounted cash flow analyses, relative contribution analyses and accretion/dilution analyses, as well as the proposed exchange ratio, potential cost and revenue synergies and the anticipated impact of the payment of various combinations of cash and stock consideration to NYMEX Holdings stockholders.

 

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On January 17, 2008, the executive committee of the CME Group board of directors held a special meeting, together with certain members of CME Group’s management and representatives of Lehman Brothers, William Blair and Skadden, Arps and Peter B. Carey of the Law Offices of Peter B. Carey, outside legal advisor to CME Group. During the meeting, management reviewed various risks and issues relating to the potential transaction with NYMEX Holdings, including the trading rights of the NYMEX Class A members. In addition, management also reviewed with the executive committee the detailed financial analyses previously discussed with CME Group’s financial advisors, including their summary financial analyses, discounted cash flow analyses, relative contribution analyses and accretion/dilution analyses as well as the proposed exchange ratio, potential cost and revenue synergies and the anticipated impact of the payment of various combinations of cash and stock consideration to NYMEX Holdings stockholders. Following management’s presentation, members of the executive committee and management discussed regulatory and antitrust considerations. In light of the potential transaction with NYMEX Holdings, management also reviewed with the board the benefits of selling the CBOT metals complex in order to comply with CME Group’s exclusive agreement to list NYMEX and COMEX products on its CME Globex electronic trading platform and requested permission to explore the sale of that business. During the meeting, representatives of Skadden, Arps provided advice with respect to certain matters. At the end of the meeting, the executive committee instructed management to proceed with its negotiations with NYMEX Holdings and pursue the sale of the CBOT metals complex.

On January 18, 2008, CME Group retained Goldman Sachs to serve as an additional financial advisor in connection with the potential transaction with NYMEX Holdings.

On January 22, 2008, the CME Group board of directors held a special meeting during which the board received an update on the status of the negotiations with NYMEX Holdings and approved the execution of a definitive agreement and the related ancillary agreements with respect to a cross-investment between CME Group and the Brazilian Mercantile & Futures Exchange S.A., or “BM&F,” pursuant to which CME Group would acquire an approximately 10% equity stake in BM&F, and BM&F would acquire approximately 1.19 million shares of CME Group Class A common stock.

On January 24, 2008, members of CME Group’s and NYMEX Holdings’ senior management, their respective financial advisors and representatives of Skadden, Arps and Weil, Gotshal & Manges, LLP, or “Weil, Gotshal,” NYMEX Holdings’ outside legal counsel, met in New York, New York to review the preliminary due diligence that had been conducted by CME Group and NYMEX Holdings and to discuss the potential strategic fit and benefits of a transaction between CME Group and NYMEX Holdings to each company and its respective stockholders, including potential cost and revenue synergies. After extensive discussions with representatives of NYMEX Holdings and its financial and legal advisors, representatives of CME Group advised the representatives of NYMEX Holdings that based on CME Group’s due diligence and the expected strategic benefits associated with a potential transaction, CME Group was prepared to acquire NYMEX Holdings for a combination of cash and stock. The representatives of CME Group explained that they were willing to acquire each share of NYMEX Holdings common stock for $36.00 plus 0.1323 of a share of CME Group Class A common stock or $48.40 per share of NYMEX Holdings common stock plus 0.1143 of a share of CME Group Class A common stock, at NYMEX Holdings’ option. In addition, the representatives of CME Group advised the representatives of NYMEX Holdings that they would require that, as a condition to the transaction, at least 75% of the NYMEX Class A memberships be purchased for up to $500 million in the aggregate and that the certificate of incorporation and bylaws of NYMEX be amended to eliminate substantially all of the rights of holders of NYMEX Class A memberships. The parties also discussed other issues relating to a potential transaction, including deal structure, valuation, post-closing governance matters, the trading rights of the NYMEX Class A members following consummation of a potential transaction and trading floor and building utilization options. At the end of the meeting, the representatives of NYMEX Holdings advised the representatives of CME Group that they would discuss the proposal with the NYMEX Holdings board of directors.

On January 25, 2008, the executive committee of CME Group’s board of directors held a special meeting, together with members of CME Group’s management and representatives of CME Group’s financial advisors

 

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and Skadden, Arps and Peter Carey to provide an update on the status of the discussions with representatives from NYMEX Holdings and to review the risks, open items and proposed terms of the potential transaction, including deal structure, financial terms, post-closing governance matters and the trading rights of the NYMEX Class A members. As part of their review of the financial terms of the transaction, management and CME Group’s financial advisors provided updates on the financial analyses previously discussed with the executive committee on January 17, 2008, including the cost and revenue synergy estimates and the accretion/dilution analysis.

On January 25, 2008, the board of directors of NYMEX Holdings and NYMEX held a special meeting together with members of NYMEX Holdings’ management, representatives of JPMorgan and Merrill Lynch, and representatives of Weil, Gotshal to discuss the meeting with the representatives of CME Group on January 24, 2008, the status of the review of CME Group’s publicly available documents and a potential transaction between CME Group and NYMEX Holdings. At the meeting, certain members of NYMEX Holdings’ management and its advisors described for the board the terms of the proposals for a potential transaction between CME Group and NYMEX Holdings made by the representatives of CME Group, including the potential structure of the deal, the proposed consideration, treatment of the NYMEX Class A memberships and post-closing governance and operations. In particular, the board discussed CME Group’s proposals with respect to the consideration to be paid in the proposed transaction. In addition, certain members of NYMEX Holdings’ management and its advisors reviewed with the board certain due diligence questions raised by the representatives of CME Group at the meeting. Representatives of JPMorgan and Merrill Lynch also reviewed with the board the financial terms of the proposals made by CME Group and their preliminary financial analyses with respect to the proposed transaction. JPMorgan and Merrill Lynch also discussed the possibility that another party would be interested in a potential transaction with NYMEX Holdings. The NYMEX Holdings board of directors then discussed the requirement that NYMEX offer to purchase all of the outstanding NYMEX Class A memberships for no more than $500 million in the aggregate and that the certificate of incorporation and bylaws of NYMEX be amended as part of the transaction to eliminate substantially all of the rights of the holders of NYMEX Class A memberships, the potential timetable of a transaction and the potential regulatory considerations raised by a transaction with CME Group. During this discussion, the board considered the fact that eight of its 15 directors owned NYMEX Class A memberships and a majority of the directors also owned a substantial amount of NYMEX Holdings common stock. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. After extensive discussion, particularly with respect to the structure of the consideration, the board authorized NYMEX Holdings’ management to advise CME Group that it was prepared to move forward with CME Group’s proposal to acquire each outstanding share of NYMEX Holdings common stock for $36.00 per share in cash and 0.1323 of a share of CME Group Class A common stock, subject to completion of due diligence and the parties reaching an agreement on all transaction terms and conditions, including, subject to review of a financial advisor and further consideration by the board, with CME Group’s condition that at least 75% of the NYMEX Class A memberships be purchased for no more than $500 million in the aggregate. During the meeting, the board determined, following discussions with NYMEX Holdings’ management and its legal and financial advisors, to engage a financial advisor to assist it in evaluating the consideration that CME Group proposed be paid to acquire the NYMEX Class A memberships. The board also authorized management to continue due diligence and pursue negotiations with CME Group.

On January 27, 2008, the CME Group board of directors held a special meeting together with members of CME Group’s management and representatives of CME Group’s financial advisors during which management reviewed the proposed terms of the transaction, including the deal structure, the financial terms, the proposed pre-closing offer to purchase all of the NYMEX Class A memberships and the post-closing elimination of substantially all of the rights of NYMEX Class A members. As part of its review of the financial terms, management reviewed with the board the detailed financial analyses previously discussed with CME Group’s financial advisors and the executive committee, including their summary financial analyses, discounted cash flow analyses, relative contribution analyses and accretion/dilution analyses, as well as the proposed exchange ratio, potential cost and revenue synergies and the anticipated impact of the payment of various combinations of cash and stock consideration to NYMEX Holdings stockholders. Following management’s presentation, the board and management discussed CME Group’s various options regarding the public announcement of CME Group’s

 

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discussions with NYMEX Holdings in response to market speculation. During the meeting, representatives of Skadden, Arps provided advice with respect to certain matters. At the end of the meeting, the board instructed management to continue negotiations on the proposed terms of the transaction with NYMEX Holdings and authorized the issuance of a press release as deemed necessary by management.

On January 28, 2008, the executive committee of the NYMEX Holdings board of directors met with NYMEX Holdings’ financial advisors and representatives of Weil, Gotshal to discuss the status of the discussions with CME Group and the parties’ ongoing due diligence review. NYMEX Holdings’ general counsel explained to the members of the executive committee that he had received a call from CME Group explaining that there was market speculation regarding a potential transaction involving CME Group and NYMEX Holdings and that it was CME Group’s view that the parties should issue a joint press release with respect to a proposed transaction. NYMEX Holdings’ general counsel reported that NYMEX Holdings’ investor relations group had confirmed that there was certain market speculation regarding a potential transaction. NYMEX Holdings’ general counsel also advised the executive committee that CME Group was unwilling to continue discussions and due diligence unless NYMEX Holdings agreed to negotiate exclusively with CME Group for a period of 30 days. The members of the executive committee discussed with management and representatives of NYMEX Holdings’ financial advisors the impact of entering into an exclusivity agreement with CME Group, including that the possibility of pursuing a potential transaction with CME Group would not be available absent entering into an exclusivity agreement, and issuing a press release in response to market speculation. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. After extensive discussion, the executive committee authorized management to enter into the exclusivity agreement and issue a press release.

On January 28, 2008, CME Group and NYMEX Holdings executed a letter agreement providing for a 30-day exclusivity period and jointly issued a press release announcing the exclusivity agreement, their preliminary discussions and the preliminary terms of the proposed transaction between CME Group and NYMEX Holdings.

Beginning on January 28, 2008 and continuing through March 16, 2008, CME Group’s and NYMEX Holdings’ representatives conducted extensive business, financial and legal due diligence and engaged in due diligence discussions with members of their respective management teams. Each of the CME Group and NYMEX Holdings due diligence teams provided CME Group’s management and the executive committee of the CME Group board of directors and NYMEX Holdings’ management and the NYMEX Holdings board of directors, respectively, with periodic updates as to the status of its diligence review and any issues raised during the review.

On January 30, 2008, at a regularly scheduled meeting of the CME Group board of directors, certain members of CME Group’s management, together with representatives of CME Group’s financial advisors and Skadden, Arps, provided an update for the board with respect to the status of the proposed transaction with NYMEX Holdings and the results of ongoing business, financial and legal due diligence. At the meeting, management and CME Group’s financial advisors reviewed the potential risks of the proposed transaction and updated the analyses previously presented to the board of the anticipated financial benefits and other terms of the transaction. In particular, management reviewed with the board its exchange ratio analysis, summary financial analysis and discounted cash flow analysis, as well as the related uncertainties and assumptions.

On January 31, 2008, the NYMEX Holdings board of directors held a special meeting during which certain members of NYMEX Holdings’ management updated the board on the status of discussions with CME Group and the due diligence review. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters.

On February 1, 2008, members of CME Group’s management and representatives of Skadden, Arps held a telephonic meeting with members of NYMEX Holdings’ management and representatives of Weil, Gotshal to discuss the ongoing due diligence review of both companies and negotiate certain terms to be included in the

 

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Merger Agreement, in particular with respect to provisions addressing consideration structure, prohibition on the solicitation of alternative transactions, change in board recommendation, termination rights and fees and treatment of the NYMEX Class A memberships.

On February 7, 2008, Skadden, Arps delivered to Weil, Gotshal an initial draft of the Merger Agreement. From February 7, 2008 through February 25, 2008, representatives of CME Group and NYMEX Holdings and their respective legal advisors engaged in extensive negotiations regarding the terms of the Merger Agreement and the related ancillary agreements as they continued their ongoing due diligence review.

On February 19, 2008, representatives of CME Group and NYMEX Holdings and their respective legal and financial advisors met in Chicago, Illinois to discuss several due diligence matters and the terms of the proposed transaction. During the meeting, the representatives of CME Group noted that the exclusivity agreement was due to expire on February 25, 2008 and that the parties would not have completed their due diligence or the negotiation of a definitive agreement by that date. The CME Group representatives explained that they would be unwilling to continue discussions without an exclusivity agreement in place, and therefore, recommended that the parties extend the exclusivity period. The representatives of NYMEX Holdings explained that they understood the issue and would consider CME Group’s request.

On February 20, 2008, a representative of CME Group’s management advised NYMEX Holdings’ general counsel that, as had been discussed in Chicago, in order for the parties to complete their due diligence review and their negotiations of the Merger Agreement and ancillary documents, CME Group and NYMEX Holdings should execute a letter agreement providing for an extension of the 30-day exclusivity period until March 15, 2008. CME Group’s representative explained to NYMEX Holdings’ general counsel that, as previously discussed, CME Group was unwilling to continue due diligence and negotiations of the Merger Agreement unless the exclusivity agreement was extended.

On February 25, 2008, the NYMEX Holdings board of directors held a special meeting during which certain members of NYMEX Holdings’ management updated the board on the status of discussions with CME Group and the due diligence review. NYMEX Holdings’ general counsel advised the board of the request of CME Group that the exclusivity agreement be extended until March 15, 2008. He explained that CME Group was unwilling to continue due diligence and negotiations unless the exclusivity agreement was extended. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. In light of the progress that had been made to date with CME Group, including with respect to the parties’ due diligence review and negotiation of the Merger Agreement, CME Group’s unwillingness to continue due diligence and negotiations without an extension of the exclusivity agreement and the fact that NYMEX Holdings had not been contacted by any third parties interested in exploring a potential transaction since the proposed transaction was first announced publicly on January 28, 2008, the board authorized NYMEX Holdings’ management to extend the exclusivity agreement until March 15, 2008. During the meeting, the board determined, following discussions with NYMEX Holdings’ management and the company’s legal and financial advisors, to engage a financial advisor to assist it in evaluating the consideration that CME Group proposed be paid to acquire the NYMEX Class A memberships.

On February 25, 2008, CME Group and NYMEX Holdings entered into a letter agreement providing for an extension of the exclusivity period until March 15, 2008. On that same day, the parties issued a press release disclosing the extension.

From February 25, 2008 through March 10, 2008, representatives of CME Group and NYMEX Holdings and their respective legal advisors continued their extensive negotiations regarding the terms of the Merger Agreement and the related ancillary agreements, in particular with respect to the provisions in the Merger Agreement addressing consideration structure, prohibition on solicitation of alternative transactions, change in board recommendation, termination rights and fees and treatment of the NYMEX Class A memberships, as they continued their ongoing due diligence review.

 

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On February 26, 2008, CME Group completed and announced its cross-investment with BM&F pursuant to which CME Group acquired an approximately 10% equity stake in BM&F, and BM&F acquired approximately 1.19 million shares of CME Group Class A common stock.

On March 3, 2008, members of CME Group’s and NYMEX Holdings’ senior management and their respective financial advisors met in New York, New York to discuss CME Group’s 2007 year-end financial results, 2008 first-quarter financial results to date, future initiatives and growth and expense drivers.

On March 4, 2008, members of CME Group’s management and representatives from Lehman Brothers, William Blair and Skadden, Arps held a meeting to discuss the progress of negotiations to date and certain financial terms to be included in the Merger Agreement.

On March 5, 2008, members of CME Group’s senior management held a telephonic meeting with members of NYMEX Holdings’ senior management to further negotiate certain terms of the Merger Agreement and discuss the status of the parties’ respective due diligence reviews.

On March 5 and March 6, 2008, the NYMEX Holdings board of directors met to review, among other things, the status of the proposed transaction, including the due diligence review that had been conducted by CME Group and NYMEX Holdings and the negotiation of the Merger Agreement and the voting and support agreements between CME Group and each of the General Atlantic Parties and Mr. Schaeffer and Dr. Newsome. Certain members of NYMEX Holdings’ senior management first summarized for the board the due diligence review that had been conducted to date, the remaining due diligence, open issues and questions and the likely timetable for the completion of the parties’ due diligence reviews. The non-management members of the board then discussed the draft Merger Agreement, a copy of which had been provided to the board prior to the meetings. In particular, the non-management members of the board discussed the transaction structure, including the ability of NYMEX Holdings stockholders to elect to receive all cash in the transaction (subject to certain limitations), the regulatory approvals provisions, the non-solicitation provision, the composition of the CME Group board of directors following consummation of the merger, the required approvals of NYMEX Holdings stockholders and NYMEX Class A members, the treatment of NYMEX Class A members in the transaction and the status of the trading floor following consummation of the merger, the ability of each of CME Group and NYMEX Holdings to terminate the Merger Agreement, the circumstances under which each of CME Group and NYMEX Holdings would pay a termination fee and the amount of the termination fee. The NYMEX Holdings board of directors then discussed the regulatory considerations associated with the proposed transaction and the ways in which NYMEX Holdings would manage such considerations, as well as the potential timetable for consummating a transaction with CME Group. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. Following extensive discussion, including in executive session without the management directors, the board authorized NYMEX Holdings’ management to continue due diligence and negotiation of the Merger Agreement and gave management guidance with respect to the provisions in the draft Merger Agreement being negotiated.

On March 6, 2008, members of CME Group’s and NYMEX Holdings’ financial management teams and their respective financial advisors met in Chicago, Illinois to discuss NYMEX Holdings’ 2007 year-end financial results, 2008 first-quarter financial results to date, future initiatives and growth and expense drivers and to discuss further the information presented by CME Group at the March 3, 2008 meeting. Later that day, the executive committee of CME Group’s board of directors held a special meeting during which management briefed the executive committee on the status of the business, financial and legal due diligence review and the progress of the negotiations with NYMEX Holdings on the terms of the Merger Agreement.

On March 7, 2008, Lehman Brothers delivered to CME Group a “highly confident” letter with respect to securing financing for the cash portion of the proposed merger consideration.

On March 9, 2008, the board of directors of NYMEX Holdings and NYMEX held a special meeting to consider the proposed transaction with CME Group. At the meeting, Mr. Schaeffer and Dr. Newsome updated

 

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the board on the status of negotiations regarding the proposed transaction with CME Group. NYMEX Holdings’ general counsel then discussed with the board the open issues in the Merger Agreement and the voting and support agreements between CME Group and each of the General Atlantic Parties, Mr. Schaeffer and Dr. Newsome. Representatives of JPMorgan and Merrill Lynch then described for the board the process undertaken by each of them in performing their respective financial analyses. JPMorgan and Merrill Lynch then reviewed with the board the financial terms of the proposed transaction and reviewed the preliminary financial analyses performed by them with respect to CME Group, NYMEX Holdings and the proposed transaction, which had previously been presented to the board, including summary financial analyses, discounted cash flow analyses, comparable companies and comparable transactions analyses, contribution analyses and accretion/dilution analyses. JPMorgan and Merrill Lynch also reviewed with the board the financial projections of each of NYMEX Holdings and CME Group that had been used in their preliminary financial analyses. The board discussed with members of NYMEX Holdings’ management and representatives of JPMorgan and Merrill Lynch the increased competition in the exchange sector, the challenges that NYMEX Holdings likely would face as a stand-alone entity and NYMEX Holdings’ electronic trading agreement with CME. The board then discussed the status of the current draft of the Merger Agreement (a copy of which had been provided to the board prior to the special meeting), including certain issues about which the board had provided guidance at the prior meetings. The NYMEX Holdings board of directors then discussed the strategic rationale for the proposed transaction and the reasons for and benefits of a transaction with CME Group. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. Following extensive discussion, including in executive session without members of NYMEX Holdings’ management in attendance, the NYMEX Holdings board of directors gave NYMEX Holdings’ management guidance with respect to the open issues in the Merger Agreement and authorized management to continue negotiations with CME Group.

On March 10, 2008, the CME Group board of directors held a special meeting to consider the proposed transaction with NYMEX Holdings. At this meeting, management updated the board on the progress of the negotiations with NYMEX Holdings to date and reviewed the strategic rationale for pursuing the transaction, including the potential cost and revenue synergies, improvement in CME Group’s global competitive position, diversification of CME Group’s business and ability to drive the growth of NYMEX Holdings’ business. Management also discussed with the board the financing costs and risks relating to the proposed transaction and its belief that CME Group would be able to finance the cash portion of the proposed merger consideration in light of the “highly confident” letter delivered by Lehman Brothers to CME Group previously and the company’s strong cash flow, relatively low leverage and favorable credit rating. Following management’s update, the board received reports on the outcome of the due diligence effort with respect to NYMEX Holdings, including presentations from PricewaterhouseCoopers LLP on its financial due diligence analysis and from management on its operational and legal due diligence review. During the meeting, representatives of CME Group’s management reviewed with the board and the board discussed the various risks relating to the transaction and the terms of the draft Merger Agreement, including the deal structure, the financial terms, the Stock Issuance, the proposed pre-closing offer to purchase all of the NYMEX Class A memberships and the post-closing elimination of substantially all of the rights of NYMEX Class A members, post-closing governance matters, the CME Group Amended Charter, the covenants related to operations of the business prior to closing the transaction, the prohibition on solicitation of alternative transactions and change in recommendation provisions, the parties’ termination rights, CME Group’s obligation to pay NYMEX Holdings a termination fee under certain circumstances and other terms of the proposed transactions contemplated by the Merger Agreement, including timing and process for stockholder and governmental approvals and other regulatory and antitrust considerations. As part of its review of the financial terms relating to the proposed transaction, management reported on the stand-alone model projections for CME Group and NYMEX Holdings, as well as its discounted cash flow analysis, while representatives of CME Group’s financial advisors described for the board the process undertaken by each of them in performing their respective financial analyses prior to reviewing their financial analyses of the proposed transaction with the board. During the meeting, representatives of Skadden, Arps provided advice with respect to certain matters. The board then considered and discussed this information as well as the information provided at prior meetings and authorized management to continue negotiations with NYMEX Holdings.

 

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On March 10, 2008, the board of directors of NYMEX Holdings and NYMEX held a special meeting. The management directors excused themselves for the portion of the meeting relating to the proposed transaction with CME Group. The board was updated on the negotiation of the Merger Agreement and the voting and support agreements between CME Group and each of the General Atlantic Parties and Mr. Schaeffer and Dr. Newsome. The board discussed the provisions of the draft Merger Agreement, including, in particular, the non-solicitation, termination and termination fee provisions, as well as the circumstances in which the board could change its recommendation to stockholders. In addition, there was a discussion regarding under what circumstances termination fees would be payable and the amount of such fees. The board also discussed the regulatory approvals covenant and the timetable for obtaining the required regulatory approvals. The board then discussed with NYMEX Holdings’ management and JPMorgan and Merrill Lynch recent changes in the market price for NYMEX Holdings common stock. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. Following extensive discussion, the board provided guidance as to the open issues in the Merger Agreement and authorized management to continue negotiations with CME Group.

From March 10, 2008 through March 16, 2008, representatives of CME Group and NYMEX Holdings and their respective legal advisors continued their extensive negotiations regarding the terms of the Merger Agreement and the related ancillary agreements, in particular with respect to the provisions in the Merger Agreement addressing prohibition on solicitation of alternative transactions, change in board recommendation, termination rights and fees and treatment of the NYMEX Class A memberships. During this period, representatives of CME Group and NYMEX Holdings, and their respective advisors, held several telephone conversations to negotiate these and other issues related to the proposed transaction.

On March 14, 2008, the board of directors of NYMEX Holdings and NYMEX held a special meeting at which Mr. Schaeffer and Dr. Newsome updated the board on the negotiations of the Merger Agreement and the voting and support agreements between CME Group and each of the General Atlantic Parties and Mr. Schaeffer and Dr. Newsome that had taken place since the last board meeting. The board then reviewed certain provisions of the Merger Agreement, including the non-solicitation provision, the regulatory approvals requirement, the treatment of the NYMEX Class A members, the conditions to consummation of the transaction, the termination provisions and the circumstances in which each of NYMEX Holdings and CME Group would pay a termination fee pursuant to the Merger Agreement. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. JPMorgan and Merrill Lynch then reviewed with the board their respective financial analyses regarding the proposed transaction and Sandler O’Neill reviewed with the board its financial analyses regarding the amount proposed to be paid to purchase the NYMEX Class A memberships. The board then received reports from NYMEX Holdings’ management team, JPMorgan and Merrill Lynch, Weil, Gotshal and KPMG regarding their due diligence of CME Group. Following these discussions, the board authorized NYMEX Holdings’ management to continue negotiations with CME Group.

On March 14, 2008, CME Group announced the sale of the CBOT metals complex to NYSE Euronext.

On March 16, 2008, the board of directors of NYMEX Holdings and NYMEX held a special meeting to discuss the proposed transaction with CME Group. At the meeting, Mr. Schaeffer and Dr. Newsome updated the board on the negotiations that had taken place with CME Group since the last board of directors’ meeting. The board again reviewed the terms of the proposed transaction, including the provisions of the Merger Agreement (a copy of which had been provided to the directors prior to the special meeting), including the provisions regarding non-solicitation, required regulatory approvals, the conditions to consummation of the proposed transaction, termination and the provisions governing when each of NYMEX Holdings and CME Group would be obligated to pay a termination fee. During the meeting, representatives of Weil, Gotshal provided advice with respect to certain matters. Representatives of JPMorgan and Merrill Lynch provided updates to the board of their respective financial analyses, including a review of financial projections of NYMEX Holdings and CME Group. Each of JPMorgan and Merrill Lynch then provided its opinion, which was subsequently confirmed in writing, that as of the date of its opinion and based upon and subject to the assumptions, conditions, limitations and other matters discussed and ultimately set forth in its written opinion, the consideration to be paid by CME Group to the

 

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holders of shares of NYMEX Holdings common stock in the proposed transaction was fair to the holders of NYMEX Holdings common stock from a financial point of view. Sandler O’Neill then provided the board with an update of its financial analyses regarding the NYMEX Class A memberships, which previously had been presented to the board, and provided its opinion, which was subsequently confirmed in writing, that, as of the date of the opinion and based upon and subject to the assumptions, factors, conditions, procedures, limitations and other matters discussed and ultimately set forth in its written opinion, the consideration of $500 million in the aggregate to be paid to the holders of NYMEX Class A memberships was fair to NYMEX Holdings from a financial point of view. Following extensive discussion of the proposed transaction, including the terms of the Merger Agreement and the analyses and opinions provided by NYMEX Holdings’ financial advisors, the NYMEX Holdings board of directors determined by unanimous vote of the directors that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of NYMEX Holdings and its stockholders, approved the Merger Agreement, the merger, the voting and support agreements between CME Group and each of the General Atlantic Parties and Mr. Schaeffer and Dr. Newsome, the membership purchase offer and the other transactions contemplated by the Merger Agreement, authorized management to enter into the Merger Agreement, resolved to submit the Merger Agreement to NYMEX Holdings stockholders for adoption and recommended that NYMEX Holdings stockholders adopt the Merger Agreement, while the NYMEX board of directors unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement, authorized NYMEX to enter into the Merger Agreement and determined that the NYMEX Charter Amendment and the NYMEX Bylaws Amendment were advisable.

On March 16, 2008, the CME Group board of directors held another special meeting at which Messrs. Duffy and Donohue updated the board on the negotiations that had taken place with NYMEX Holdings since the last board meeting. The board and management discussed financing alternatives for the proposed transaction in the context of the current condition of the debt markets and reviewed updates to the principal terms of the transaction since the last board meeting, including with respect to terms relating to the regulatory process and approvals, financing, the prohibition on solicitation of alternative transactions, termination terms of the Merger Agreement and CME Group’s obligation to pay NYMEX Holdings a termination fee under certain circumstances. The board and management also discussed the CME Group Amended Charter and the Stock Issuance. Representatives of CME Group’s financial advisors each provided updates on their respective analyses, reviewed the stand-alone model projections for CME Group and NYMEX Holdings previously presented to the board and verbally stated their opinions (subsequently confirmed in writing) that as of the date of their opinions and based upon and subject to the assumptions, factors, conditions, procedures, limitations and other matters discussed and ultimately set forth in their written opinions, the consideration to be paid for each outstanding share of NYMEX Holdings common stock, taken in the aggregate, by CME Group in the proposed transaction was fair to the company, from a financial point of view. In addition, the board reviewed recent events in the financial and banking markets that had affected adversely certain CME Group and NYMEX Holdings customers, the impact of such events on CME Group and NYMEX Holdings individually and as part of the global derivatives industry and the advisability of proceeding with the proposed transaction in such environment. During the meeting, representatives of Skadden, Arps provided advice with respect to certain matters. Following deliberations and reviewing all aspects of the proposed transaction as presented to the board at this meeting and prior meetings and considering risks due to the current economic environment, the board determined by unanimous vote of the directors present (Myron S. Scholes was the only director of CME Group not present at the time of the vote) that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of CME Group and its stockholders and then approved the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement, determined that the CME Group Amended Charter and the Stock Issuance were advisable, authorized management to enter into the Merger Agreement, resolved to submit the CME Group Amended Charter and the Stock Issuance to CME Group stockholders for approval and recommended that CME Group stockholders approve the CME Group Amended Charter and the Stock Issuance.

In the early morning of March 17, 2008, representatives of CME Group and each of the General Atlantic Parties and Mr. Schaeffer and Dr. Newsome executed the voting and support agreements and representatives of CME Group and NYMEX Holdings executed the Merger Agreement. CME Group and NYMEX Holdings

 

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announced the transaction through the issuance of a joint press release prior to the open of the U.S. financial markets on that day.

CME Group’s Reasons for the Merger; Recommendation of CME Group’s Board of Directors

On March 16, 2008, CME Group’s board of directors approved the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement and determined that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of CME Group and its stockholders. CME Group’s board of directors recommends that CME Group stockholders vote “FOR” the proposal to approve the CME Group Amended Charter and “FOR” the proposal to approve the Stock Issuance.

In reaching its decision to approve the Merger Agreement and recommend that its stockholders approve the CME Group Amended Charter and approve the Stock Issuance, CME Group’s board of directors considered a number of factors, including the ones discussed in the following paragraphs. In light of the number and wide variety of factors considered in connection with its evaluation of the transaction, CME Group’s board of directors did not consider it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its determination. Rather, CME Group’s board of directors made its recommendation based on the totality of information presented to, and the investigation conducted by or at the direction of, CME Group’s board of directors. In addition, individual directors may have given different weight to different factors. This explanation of CME Group’s reasons for the proposed merger with NYMEX Holdings and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Forward-Looking Statements” beginning on page 41.

In arriving at its determination, CME Group’s board of directors consulted with CME Group’s management and its financial and legal advisors and considered a number of factors, including the following material factors, which CME Group’s board of directors viewed as generally supporting its determination:

 

•

the current environment in the global derivatives industry, including the trend of consolidation and increased competition, and the likely effect of these factors on CME Group in light of, and in the absence of, the proposed transaction;

 

•

the fact that CME Group would continue to be the world’s most diverse global exchange, with greater financial, operational and other resources to compete against other U.S. and foreign exchanges and the over-the-counter market in a rapidly changing and global industry;

 

•

the fact that the transaction would provide the ability to leverage CME Group’s scalable business model;

 

•

the fact that CME Group stockholders immediately prior to the merger will own at least approximately 81% of CME Group immediately following the merger;

 

•

the fact that the merger consideration represented a premium to NYMEX Holdings stockholders of approximately 15.8% based on the closing prices of CME Group Class A common stock and NYMEX Holdings common stock on January 24, 2008 (two trading days prior to the date on which NYMEX Holdings and CME Group publicly announced they were engaged in preliminary discussions and the preliminary terms of the proposed transaction);

 

•

the fact that the complementary nature of the product offerings, business models, processes and structures of CME Group and NYMEX Holdings could result in significant cost savings to both customers and CME Group, including an expected $60 million in cost synergies and additional growth opportunities;

 

•

the fact that joining with NYMEX Holdings will further build CME Group’s presence in New York, and in locations where energy and metals products are central to risk management strategies, particularly in the Middle East and Asia;

 

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•

the fact that the combination of CME Group’s distribution network and NYMEX Holdings’ exchange-traded and over-the-counter products could position the company for future growth;

 

•

the fact that CME Group would have greater financial, operational and technical resources to develop innovative new products, technologies and functionality to meet the risk-management needs of CME Group’s customers, grow trading volume and increase global expansion;

 

•

the ability to extend the benefits of the parties’ existing technology services agreement;

 

•

the financial analyses presented by Lehman Brothers, Goldman Sachs and William Blair, CME Group’s financial advisors, to the CME Group board of directors, and their respective opinions, each delivered orally to the CME Group board of directors on March 16, 2008 and subsequently confirmed in writing on March 16, 2008, March 17, 2008 and March 16, 2008, respectively, to the effect that, as of that date, and subject to and based on the qualifications and assumptions set forth in their respective opinions, the consideration to be paid by CME Group in the merger was fair, from a financial point of view, to CME Group (see the sections entitled “—Opinion of Lehman Brothers, Financial Advisor to CME Group,” beginning on page 73, “—Opinion of Goldman Sachs, Financial Advisor to CME Group” beginning on page 80 and “—Opinion of William Blair, Financial Advisor to CME Group” beginning on page 91);

 

•

information concerning CME Group’s and NYMEX Holdings’ respective businesses, prospects, financial condition and results of operations, management and competitive position, including information contained in public reports concerning results of operations for the most recent fiscal year and fiscal quarters, as well as projections prepared by CME Group’s management of each party’s future financial performance;

 

•

current financial market conditions and historical market prices, volatility and trading information with respect to CME Group Class A common stock and NYMEX Holdings common stock;

 

•

the fact that the proposed pre-closing offer to purchase all of the NYMEX Class A memberships and the post-closing changes to the rights of NYMEX Class A members would give CME Group flexibility to operate the business consistently with CME Group’s business model following the merger;

 

•

the fact that shares of common stock of NYMEX Holdings representing approximately 6.6% of its total voting power are committed to vote in favor of the adoption of the Merger Agreement and the other transactions contemplated by the Merger Agreement (see “The Voting and Support Agreements” beginning on page 153);

 

•

the results of business, legal and financial due diligence investigations of NYMEX Holdings conducted by CME Group’s management and legal and financial advisors, and the resulting conclusions by the parties conducting the due diligence investigations;

 

•

the belief, taking into account a “highly confident” letter delivered to CME Group by Lehman Brothers and CME Group’s relatively low leverage, strong cash flow and favorable credit rating, that CME Group will be able to finance the cash portion of the merger consideration on terms acceptable to the CME Group board of directors and repay the assumed debt in due course;

 

•

the belief that the terms of the Merger Agreement, including the parties’ respective representations, warranties and covenants, are reasonable; and

 

•

the fact that upon termination of the Merger Agreement under specified circumstances, NYMEX Holdings may be required to pay CME Group a termination fee of $308.1 million.

In addition to the factors described above, the CME Group board of directors identified and considered a variety of risks and potentially negative factors in its deliberations concerning the merger, including:

 

•

the possibility that the merger might not be completed as a result of the failure of one or more conditions to the merger, or that completion of the merger might be unduly delayed or subject to adverse conditions that may be imposed by governmental authorities;

 

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•

the effect of the public announcement of the merger on CME Group’s revenues, operating results, stock price, customers, suppliers, employees and other constituencies;

 

•

the possibility of management and employee disruption associated with the transaction and the integration of the two companies’ operations;

 

•

the risk that the potential benefits sought in the merger might not be fully realized;

 

•

the risk that the operations of the two companies might not be successfully integrated or integrated in a timely manner, and the possibility of not achieving the anticipated synergies and other benefits sought to be obtained in the merger;

 

•

the substantial costs to be incurred in connection with the merger, including costs of integrating the businesses and transaction expenses arising from the merger;

 

•

the fact that upon termination of the Merger Agreement under specified circumstances, CME Group may be required to pay NYMEX Holdings a termination fee of $308.1 million;

 

•

the need to obtain approvals from CME Group stockholders, NYMEX Holdings stockholders and NYMEX Class A members in order to complete the transaction;

 

•

the need for NYMEX to purchase at least 75% of the NYMEX Class A memberships in the membership purchase offer in order to complete the transaction;

 

•

the interests that certain executive officers and directors of CME Group may have with respect to the merger in addition to their interests as CME Group stockholders generally, as described in the section entitled “—Interests of CME Group Executive Officers and Directors in the Merger” beginning on page 119;

 

•

the fact that certain senior executives of NYMEX Holdings would receive substantial payments in connection with the merger, and that NYMEX Holdings would also be obligated to make gross-up payments to those executives for the amount of certain taxes resulting from some of these payments (see “—Interests of NYMEX Holdings Executive Officers and Directors in the Merger” beginning on page 119);

 

•

the fact that the closing of the merger is not conditioned on CME Group’s ability to find suitable financing for the cash consideration;

 

•

the fact that turmoil in the debt markets has resulted in higher interest rates, more onerous covenants and greater difficulty in securing financing;

 

•

the fact that recent events in the financial and banking markets have affected adversely certain CME Group and NYMEX Holdings customers; and

 

•

various other risks associated with the merger and NYMEX Holdings’ business and CME Group set forth under the section entitled “Risk Factors” beginning on page 32.

The foregoing discussion of the material factors considered by the CME Group board of directors is not intended to be exhaustive, but does set forth the principal factors considered by the CME Group board of directors.

NYMEX Holdings’ Reasons for the Merger; Recommendation of NYMEX Holdings’ Board of Directors

On March 16, 2008, NYMEX Holdings’ board of directors, by unanimous vote, approved the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement and determined that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of NYMEX Holdings and its stockholders. NYMEX Holdings’ board of directors unanimously recommends that NYMEX Holdings stockholders vote “FOR” the adoption of the Merger Agreement at the special meeting of NYMEX Holdings stockholders.

 

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In reaching its decision to approve the Merger Agreement and recommend that its stockholders adopt the Merger Agreement, NYMEX Holdings’ board of directors considered a number of factors, including the ones discussed in the following paragraphs. In light of the number and wide variety of factors considered in connection with its evaluation of the transaction, NYMEX Holdings’ board of directors did not consider it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its determination. Rather, the NYMEX Holdings board of directors made its recommendation based on the totality of information presented to, and the investigation conducted by or at the direction of, NYMEX Holdings’ board of directors. In addition, individual directors may have given different weight to different factors. This explanation of NYMEX Holdings’ reasons for the proposed merger with CME Group and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Forward-Looking Statements” beginning on page 41.

In arriving at its determination, NYMEX Holdings’ board of directors consulted with NYMEX Holdings’ management and its financial and legal advisors and considered a number of factors, including the following material factors, which NYMEX Holdings’ board of directors viewed as generally supporting its determination:

 

•

the ability of NYMEX Holdings stockholders to participate in the future growth of a globally competitive, diversified company;

 

•

the opportunity for NYMEX Holdings stockholders to elect to receive cash and/or stock consideration, which will enable many stockholders to receive immediate cash value while those stockholders who wish to continue to participate in CME Group post-merger will have the chance to do so, subject to the proration provisions of the Merger Agreement;

 

•

the expectation that the exchange of NYMEX Holdings common stock for CME Group Class A common stock, in the merger, generally would be nontaxable to NYMEX Holdings stockholders to the extent of the CME Group Class A common stock they receive;

 

•

historical and current information concerning CME Group’s business, financial performance and condition, operations, management, competitive position and prospects, before and after giving effect to the merger and the merger’s potential effect on stockholder value;

 

•

the fact that CME Group is the world’s most diverse global exchange, with greater financial, operational and other resources to compete against other U.S. and foreign exchanges and the over-the-counter market in a rapidly changing industry;

 

•

the fact that NYMEX Holdings stockholders immediately prior to the merger will own approximately 18.6% of CME Group immediately following the merger and will therefore participate meaningfully in the significant opportunities for long-term growth of CME Group;

 

•

the opinion of JPMorgan to the effect that, as of March 16, 2008 and based upon and subject to the factors, limitations and assumptions set forth therein, the merger consideration to be received by NYMEX Holdings stockholders was fair, from a financial point of view, to NYMEX Holdings stockholders (see “—Opinion of JPMorgan, Financial Advisor to NYMEX Holdings” beginning on page 98);

 

•

the opinion of Merrill Lynch to the effect that, as of March 16, 2008 and based upon and subject to the factors, limitations and assumptions set forth therein, the merger consideration to be received by NYMEX Holdings stockholders was fair, from a financial point of view, to NYMEX Holdings stockholders (see “—Opinion of Merrill Lynch, Financial Advisor to NYMEX Holdings” beginning on page 106);

 

•

the opinion of Sandler O’Neill to the effect that, as of March 16, 2008 and based upon and subject to the factors, limitations and assumptions set forth therein, the offer price for the NYMEX Class A memberships was fair, from a financial point of view, to NYMEX Holdings (see “—Opinion of Sandler O’Neill, Financial Advisor to NYMEX Holdings” beginning on page 114);

 

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•

information concerning NYMEX Holdings’ and CME Group’s respective businesses, prospects, financial condition and results of operations, management and competitive position, including information contained in public reports concerning results of operations for the most recent fiscal year and fiscal quarters, as well as each party’s projected financial performance;

 

•

the opportunity for NYMEX Holdings stockholders to benefit from any increase in the trading price of CME Group common stock between the announcement of the Merger Agreement and the completion of the merger;

 

•

the results of business, legal and financial due diligence investigations of CME Group conducted by NYMEX Holdings’ management and legal and financial advisors, and the resulting conclusions by the parties conducting the due diligence investigations;

 

•

current financial market conditions and historical market prices, volatility and trading information with respect to CME Group Class A common stock and NYMEX Holdings common stock;

 

•

the results of business, legal and financial due diligence investigations of CME Group conducted by NYMEX Holdings’ management and legal and financial advisors, and the resulting conclusions by the parties conducting the due diligence investigations;

 

•

the belief, taking into account a “highly confident” letter delivered to CME Group by Lehman Brothers and CME Group’s relatively low leverage, strong cash flow and favorable credit rating, that CME Group will be able to finance the cash portion of the merger consideration on terms acceptable to the CME Group board of directors and repay the assumed debt in due course; and

 

•

the belief that the terms of the Merger Agreement, including the parties’ respective representations, warranties and covenants, are reasonable.

In addition to the factors described above, the NYMEX Holdings board of directors identified and considered a variety of risks and potentially negative factors in its deliberations concerning the merger, including:

 

•

the possibility that the merger might not be completed as a result of the failure of one or more conditions to the merger, or that completion of the merger might be unduly delayed or subject to adverse conditions that may be imposed by governmental authorities;

 

•

the effect of the public announcement of the merger on CME Group’s revenues, operating results, stock price, customers, suppliers, employees and other constituencies;

 

•

the possibility of management and employee disruption associated with the transaction and the integration of the two companies’ operations;

 

•

the fact that upon termination of the Merger Agreement under specified circumstances, NYMEX Holdings may be required to pay CME Group a termination fee of $308.1 million;

 

•

the need to obtain approvals from CME Group stockholders, NYMEX Holdings stockholders and NYMEX Class A members in order to complete the transaction;

 

•

the need for NYMEX to purchase at least 75% of the NYMEX Class A memberships in the membership purchase offer in order to complete the transaction; and

 

•

the interests that certain executive officers and directors of NYMEX Holdings may have with respect to the merger in addition to their interests as NYMEX Holdings stockholders generally, as described in the section entitled “—Interests of NYMEX Holdings Executive Officers and Directors in the Merger” beginning on page 119.

 

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Opinion of Lehman Brothers, Financial Advisor to CME Group

In August 2007, the CME Group board of directors engaged Lehman Brothers to act as its financial advisor with respect to pursuing a strategic combination with NYMEX Holdings. On March 16, 2008, Lehman Brothers rendered its oral opinion (subsequently confirmed in writing) to the CME Group board of directors that as of such date and, based upon and subject to the matters stated in its opinion, from a financial point of view, the consideration to be paid by CME Group to the NYMEX Holdings stockholders in the merger was fair to CME Group.

The full text of Lehman Brothers’ written opinion, dated March 16, 2008 is attached as Annex B to this joint proxy statement/prospectus. Stockholders are encouraged to read Lehman Brothers’ opinion carefully in its entirety for a description of the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Lehman Brothers in rendering its opinion. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder as to how that stockholder should vote or act with respect to the proposed merger or any other matters described in this joint proxy statement/prospectus. The following is a summary of Lehman Brothers’ opinion and the methodology that Lehman Brothers used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

Lehman Brothers’ advisory services and opinion were provided for the information and assistance of the CME Group board of directors in connection with its consideration of the merger. Lehman Brothers was not requested to opine as to, and Lehman Brothers’ opinion does not address, CME Group’s underlying business decision to proceed with or effect the merger.

In arriving at its opinion, Lehman Brothers reviewed and analyzed, among other things:

 

•

the Merger Agreement and the specific terms of the merger, including the pre-closing membership purchase offer by NYMEX;

 

•

publicly available information concerning CME Group and NYMEX Holdings that Lehman Brothers believed to be relevant to its analysis, including certain periodic reports filed by CME Group and NYMEX Holdings, including their most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q;

 

•

financial and operating information with respect to the business, operations and prospects of NYMEX Holdings furnished to Lehman Brothers by NYMEX Holdings and CME Group, including (i) financial projections of NYMEX Holdings prepared by the management of NYMEX Holdings and (ii) financial projections of NYMEX Holdings prepared by the management of CME Group;

 

•

financial and operating information with respect to the businesses, operations and prospects of CME Group furnished to Lehman Brothers by CME Group, including (i) financial projections of CME Group prepared by the management of CME Group and (ii) the amounts and timing of certain cost savings and revenue synergies expected by the management of CME Group to result from the merger;

 

•

trading histories of CME Group Class A common stock and of NYMEX Holdings common stock from November 16, 2006 to March 14, 2008 and a comparison of each of their trading histories with those of other companies that Lehman Brothers deemed relevant;

 

•

the relative contributions of CME Group, on the one hand, and NYMEX Holdings, on the other hand, to the current and future financial performance of the combined company on a pro forma basis;

 

•

a comparison of the financial terms of the merger with the financial terms of certain other transactions that Lehman Brothers deemed relevant;

 

•

the potential pro forma financial impact of the merger on the future financial performance of CME Group, including the expected cost savings and revenue synergies;

 

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•

a comparison of the historical financial results and present financial condition of CME Group and NYMEX Holdings with each other and with those of other companies that Lehman Brothers deemed relevant; and

 

•

published estimates by independent equity research analysts with respect to the future financial performance of CME Group and NYMEX Holdings.

In addition, Lehman Brothers had discussions with the managements of CME Group and NYMEX Holdings concerning their respective businesses, operations, assets, financial conditions and prospects and undertook such other studies, analyses and investigations as Lehman Brothers deemed appropriate.

In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by Lehman Brothers without assuming any responsibility for independent verification of such information. Lehman Brothers further relied upon the assurances of the managements of CME Group and NYMEX Holdings that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections of CME Group and NYMEX Holdings, upon advice of CME Group and NYMEX Holdings, Lehman Brothers assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the managements of CME Group and NYMEX Holdings as to their respective future financial performance and that they would perform substantially in accordance with such projections. With respect to the operating synergies and strategic benefits expected by the management of CME Group to result from a combination of the businesses of CME Group and NYMEX Holdings, upon advice of CME Group and NYMEX Holdings, Lehman Brothers assumed that such estimated operating synergies and strategic benefits will be achieved substantially in accordance with such expectations. In arriving at its opinion, Lehman Brothers did not conduct or obtain any evaluations or appraisals of the assets or liabilities of CME Group or NYMEX Holdings, nor did it conduct a physical inspection of the properties and facilities of CME Group and NYMEX Holdings. Lehman Brothers’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, March 16, 2008.

Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. The CME Group board of directors selected Lehman Brothers because of its expertise, reputation and familiarity with CME Group and the exchange industry generally and because its investment banking professionals have substantial experience in transactions comparable to the merger.

The following is a summary of the material financial analyses used by Lehman Brothers in connection with providing its opinion to the CME Group board of directors. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by Lehman Brothers, the tables must be read together with the text of each summary. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Lehman Brothers’ opinion.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies, Lehman Brothers, based on its experience with companies in the exchange industry, reviewed and compared specific financial and operating data relating to NYMEX Holdings with selected companies that Lehman Brothers deemed comparable to NYMEX Holdings, including:

 

•

Australian Stock Exchange Limited

 

•

Bolsa de Mercadorias & Futuros—BM&F S.A.

 

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•

Bolsas y Mercados Españoles S.A.

 

•

Bovespa Holding S.A.

 

•

Bursa Malaysia Berhad

 

•

CME Group Inc.

 

•

Deutsche Börse AG

 

•

Hong Kong Exchanges and Clearing Limited

 

•

IntercontinentalExchange, Inc.

 

•

London Stock Exchange plc

 

•

NASDAQ OMX Group, Inc.

 

•

NYSE Euronext

 

•

Singapore Exchange Ltd.

 

•

TSX Group, Inc.

As part of its comparable company analysis, Lehman Brothers calculated and analyzed NYMEX Holdings’ and each comparable company’s ratio of current stock price to its projected earnings per share (commonly referred to as a “price earnings ratio,” or “P/E”). Lehman Brothers also calculated and analyzed various financial multiples, including NYMEX Holdings’ and each comparable company’s enterprise value to certain historical financial criteria such as revenue and earnings before interest, taxes, depreciation and amortization, or “EBITDA.” The enterprise value of each company was obtained by adding its short- and long-term debt to the sum of the market value of its common equity, and subtracting its cash and cash equivalents. For the comparable companies, these calculations were performed based on publicly available financial data (including Wall Street consensus estimates per the Institutional Brokers Estimate System, or “IBES,” database) and closing prices as of March 14, 2008, the last trading date prior to the delivery of Lehman Brothers’ opinion. For the NYMEX Holdings implied share price, the calculations were based on financial projections prepared by CME Group management.

The following table sets forth the results of this analysis.

 

		Comparable Companies at March 14, 2008 Closing Prices
		Range		Median
Ratio of Price to:
Calendar Year 2008 Estimated Earnings		25.0x – 37.0x		26.4x
Calendar Year 2009 Estimated Earnings		20.1x – 26.5x		20.4x
Ratio of Enterprise Value to:
Calendar Year 2008 Estimated Revenue		10.2x – 19.5x		11.4x
Calendar Year 2009 Estimated Revenue		9.0x – 14.1x		9.3x
Ratio of Enterprise Value to:
Calendar Year 2008 Estimated EBITDA		15.0x – 29.2x		15.2x
Calendar Year 2009 Estimated EBITDA		11.7x – 19.8x		12.3x

Lehman Brothers selected the comparable companies above because their businesses and operating profiles are reasonably similar to those of NYMEX Holdings. However, because of the inherent differences between the business, operations and prospects of NYMEX Holdings and the businesses, operations and prospects of the selected comparable companies, no comparable company is exactly the same as NYMEX Holdings. Therefore,

 

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Lehman Brothers believed that it was inappropriate to, and therefore did not rely solely on the quantitative results of the comparable company analysis. Accordingly, Lehman Brothers also made qualitative judgments concerning differences between the financial and operating characteristics and prospects of NYMEX Holdings and the companies included in the comparable company analysis that would affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between CME Group and NYMEX Holdings and the companies included in the comparable company analysis.

Based on this analysis, Lehman Brothers derived a reference range for the implied share price of NYMEX of approximately $86.75 to $108.50 per share.

Comparable Transaction Analysis

Using publicly available information, Lehman Brothers reviewed and compared the purchase prices and financial multiples paid in 25 acquisitions of companies that Lehman Brothers, based on its experience with merger and acquisition transactions, deemed relevant to arriving at its opinion. Lehman Brothers chose the transactions used in the comparable transaction analysis based on the similarity of the target companies in the transactions to NYMEX Holdings in the size, mix, margins and other characteristics of their businesses. Lehman Brothers referenced the following transactions:

 

•

NYSE Euronext / American Stock Exchange

 

•

TSX Group, Inc. / Montreal Exchange Inc.

 

•

The Nasdaq Stock Market, Inc. / Philadelphia Stock Exchange

 

•

TradeWeb Group LLC / Thompson Corp.

 

•

London Stock Exchange Group plc / Borsa Italiana S.p.A.

 

•

The NASDAQ Stock Market, Inc. / OMX AB

 

•

Eurex / International Securities Exchange Holdings, Inc.

 

•

State Street Corp. / Currenex Inc.

 

•

Chicago Mercantile Exchange Holdings Inc. / CBOT Holdings, Inc.

 

•

IntercontinentalExchange, Inc. / New York Board of Trade, Inc.

 

•

NYSE Group, Inc. / Euronext N.V.

 

•

ICAP plc / EBS Group Limited

 

•

Australian Stock Exchange Limited / SFE Corporation Limited

 

•

The Nasdaq Stock Market, Inc. / Instinet Group Incorporated

 

•

New York Stock Exchange, Inc. / Archipelago Holdings, Inc.

 

•

OMHEX / Copenhagen Stock Exchange

 

•

Thomas H. Lee Partners LP / Refco Inc.

 

•

The Nasdaq Stock Market, Inc. / Brut LLC

 

•

Clearnet, LCH / The London Clearing House Limited

 

•

Bank of New York Company, Inc. / Pershing LLC

 

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•

ICAP plc / BrokerTec LLC

 

•

Instinet Corporation / Island ECN, Inc.

 

•

Deutsche Börse AG / Clearstream Banking AG

 

•

Euronext N.V. / London International Financial Futures and Options Exchange

 

•

IntercontinentalExchange, Inc. / International Petroleum Exchange of London, Ltd.

Lehman Brothers selected an equity value per share multiple range of 45.0x to 52.5x the historical earnings per share, or “EPS,” for the last 12 months ended December 31, 2007, or “LTM,” based on average P/E multiples, consideration type and judgmental impact of cycle timing. However, no company or transaction utilized in the precedent transaction analysis is identical to NYMEX Holdings or the merger. Based on the range of equity value per share multiples and using the financial projections of NYMEX Holdings prepared by the management of CME Group, the implied share price range of NYMEX Holdings on March 16, 2008 was $106.25 to $124.00 per share.

Transaction Premium Analysis

Lehman Brothers reviewed the premium paid for mergers and acquisitions of U.S. public companies with values between $7.5 billion and $15 billion from 2002 to 2007. Lehman Brothers calculated the premium per share paid by the acquiror compared to the share price of the target company prevailing (i) one day, (ii) one week and (iii) four weeks prior to the announcement of the transaction. This analysis produced the following median premiums and implied equity values for NYMEX Holdings:

 

		Period Prior to Announcement
		One Day			One Week			Four Weeks
NYMEX Holdings share price		$	107.16		$	97.30		$	132.08
Median premiums			12.7%			16.2%			29.1%
Implied equity values per share		$	120.77		$	113.06		$	170.52

Based on this analysis, Lehman Brothers derived a range for the implied share price of NYMEX Holdings of approximately $139.00 to $151.25 per share based on a selected premium range of 15% to 25% and the 30-day average trading price as of January 24, 2008, the day on which the preliminary agreement was reached between CME Group and NYMEX Holdings.

NYMEX Discounted Cash Flow Analysis

As part of its analysis, and in order to estimate the present value of NYMEX Holdings common stock on a standalone basis, Lehman Brothers also prepared a ten-year discounted cash flow analysis for NYMEX Holdings, calculated as of January 1, 2008, of after-tax unlevered free cash flows for fiscal years 2008 through 2017 based upon estimated financial data for NYMEX Holdings prepared by CME Group management.

Based upon projected financial results for NYMEX Holdings prepared by CME Group management, Lehman Brothers estimated a range of terminal values by applying perpetuity growth rates of 3.5% to 4.5% to 2018 estimated unlevered free cash flow. Lehman Brothers discounted the unlevered free cash flow streams and the estimated terminal value to a present value at a range of discount rates from 10.5% to 11.0%. The discount rates utilized in this analysis were chosen by Lehman Brothers based on its expertise and experience with the exchange industry and also on an analysis of the weighted average cost of capital of NYMEX Holdings and other comparable companies. Lehman Brothers calculated per share equity values by first determining a range of enterprise values of NYMEX Holdings by adding the present values of the after-tax unlevered free cash flows

 

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and perpetuity growth rates and discount rate scenario, and then subtracting from the enterprise values the net debt (which is total debt less cash) and non-operating assets of NYMEX Holdings, and dividing those amounts by the number of fully diluted shares of NYMEX Holdings.

Based on the projections and assumptions set forth above, the discounted cash flow analysis of NYMEX Holdings yielded an implied valuation range of NYMEX Holdings common stock on a standalone basis of $116.50 to $142.50 per share.

In addition, Lehman Brothers performed a discounted cash flow analysis to calculate an implied valuation range of the unlevered, after-tax free cash flows for NYMEX Holdings, including the expected cost savings and revenue synergies generated by the transaction. After taking into account a range of 50% to 100% of the expected cost savings and revenue synergies estimated by CME Group management, Lehman Brothers applied a range of perpetuity growth rates of 3.5% to 4.5% and discounted the unlevered free cash flows and the estimated terminal value to present values at a range of discount rates from 10.5% to 11.0%.

Based on the projections and assumptions set forth above, the discounted cash flow analysis of NYMEX Holdings, including the expected cost savings and revenue synergies, yielded an implied valuation range of NYMEX Holdings common stock of $119.75 to $149.00 per share.

Contribution Analysis

Lehman Brothers analyzed the respective contributions of CME Group and NYMEX Holdings based on historical financial information for the 12 months ended December 31, 2007 and CME Group management estimates for 2008, 2009 and 2010 revenues, EBITDA, pre-tax income and net income of CME Group and NYMEX Holdings. In addition, Lehman Brothers also evaluated the contributions of CME Group and NYMEX Holdings, attributing the expected cost savings and revenue synergies generated by the transaction to NYMEX Holdings.

Based on this analysis, Lehman Brothers derived a range for NYMEX Holdings’ contribution of approximately 23% to 27%. By comparison, NYMEX Holdings stockholders will receive 18.6% pro forma ownership of the combined entity on a fully diluted basis, assuming cash consideration of $3.4 billion in aggregate. NYMEX Holdings stockholders would receive an implied pro forma ownership of 26.2% if the merger consideration were hypothetically 100% stock. Based on the contribution range, the implied share prices of NYMEX on March 16, 2008 were $78.25 to $106.00 per share.

Pro Forma Analysis

In order to evaluate the estimated ongoing impact of the merger, Lehman Brothers analyzed the pro forma earnings effect of the merger from the perspective of CME Group stockholders. The pro forma earnings effect analysis was performed in order to assess the impact of the merger on earnings per share from the perspective of CME Group stockholders. For the purposes of this analysis, Lehman Brothers assumed (i) a $100.30 per-share price for NYMEX Holdings common stock acquired pursuant to the terms of the transaction, (ii) a $486.05 per-share price for CME Group Class A common stock (the closing market price per share on March 14, 2008), (iii) a transaction structure with 64% stock and 36% cash consideration (representing the mandatory cash component of approximately $3.4 billion), (iv) financial forecasts for each company prepared by the management of CME Group and (v) cost savings and revenue synergies expected by CME Group management. Lehman Brothers estimated that, based on the assumptions described above, the pro forma impact of the transaction would be accretive to earnings per share of CME Group in calendar year 2010. The financial forecasts that underlie this analysis are subject to substantial uncertainty and, therefore, actual results may be substantially different.

 

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Returns Analysis

In order to evaluate the estimated return on an investment in NYMEX Holdings from the perspective of CME Group’s stockholders, Lehman Brothers calculated the internal rate of return on an investment in NYMEX Holdings. For the purposes of this analysis, Lehman Brothers assumed a transaction value of $9.5 billion based on a $100.30 per share price for NYMEX Holdings common stock acquired pursuant to the terms of the transaction plus net debt of NYMEX Holdings to arrive at the initial investment value. Lehman Brothers calculated the internal rate of return on an investment in NYMEX Holdings, including expected cost savings and revenue synergies, based on (i) applying a range of terminal P/E multiples of 18.0x to 22.0x to the estimated 2018 net income and (ii) applying a range of perpetuity growth rates of 2% to 6% to the estimated 2018 unlevered free cash flow.

The following table sets forth the results of this analysis.

 

		Return on Investment
		Range		Value
Terminal P/E Multiple		18.0x – 22.0x		19.6% – 21.8%
Perpetuity Growth Rate		2.0% – 6.0%		12.7% – 14.8%

General

In connection with the review of the merger by CME Group’s board of directors, Lehman Brothers performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, Lehman Brothers considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Furthermore, Lehman Brothers believes that the summary provided and the analyses described above must be considered as a whole and that selecting any portion of its analyses, without considering all of them, would create an incomplete view of the process underlying its analyses and opinion. In addition, Lehman Brothers may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Lehman Brothers’ view of the actual value of CME Group or NYMEX Holdings. The issuance of Lehman Brothers opinion was approved by Lehman Brothers’ fairness opinion committee.

In performing its analyses, Lehman Brothers made numerous assumptions with respect to industry risks associated with reserves, industry performance, general business and economic conditions and other matters, many of which are beyond the control of CME Group or NYMEX Holdings. Any estimates contained in Lehman Brothers’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. The analyses performed were prepared solely as part of Lehman Brothers’ analysis of the fairness from a financial point of view to CME Group of the consideration to be paid by CME Group to NYMEX Holdings stockholders in the merger and were prepared in connection with the delivery by Lehman Brothers of its opinion, dated March 16, 2008, to CME Group’s board of directors. The analyses do not purport to be appraisals or to reflect the prices at which CME Group Class A common stock or NYMEX Holdings common stock might trade following announcement of the merger or the prices at which CME Group Class A common stock might trade following consummation of the merger.

The terms of the merger were determined through arm’s length negotiations between CME Group and NYMEX Holdings and were approved by CME Group’s and NYMEX Holdings’ boards of directors. Lehman Brothers did not recommend any specific exchange ratio or form of consideration to CME Group or that any specific exchange ratio or form of consideration constituted the only appropriate consideration for the merger. Lehman Brothers’ opinion does not address the fairness of the amount or the nature of any compensation to any

 

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officers, directors or employees of any parties to the merger, or any class of such persons, relative to the consideration paid in the merger or otherwise.

Lehman Brothers’ opinion was one of the many factors taken into consideration by CME Group’s board of directors in making its determination to approve the Merger Agreement. Lehman Brothers’ analyses summarized above should not be viewed as determinative of the opinion of CME Group’s board of directors with respect to the value of CME Group or NYMEX Holdings or of whether CME Group’s board of directors would have been willing to agree to a different exchange ratio or form of consideration.

As compensation for Lehman Brothers’ services in connection with the merger, CME Group paid Lehman Brothers $5 million upon delivery of Lehman Brothers’ opinion, and compensation of an additional $18 million will be payable on completion of the merger. In addition, CME Group has agreed to reimburse Lehman Brothers for reasonable out-of-pocket expenses incurred in connection with the merger and to indemnify Lehman Brothers for certain liabilities that may arise out of its engagement by CME Group and the rendering of the Lehman Brothers opinion.

Lehman Brothers has performed various investment banking and financial services for CME Group and NYMEX Holdings in the past, and expects to perform such services in the future, and has received, and expects to receive, customary fees for such services. Specifically, in the past two years, Lehman Brothers has performed the following investment banking and financial services: (i) acted as financial advisor for CME Holdings on its acquisition of CBOT Holdings, or the “CBOT Transaction,” and rendered fairness opinions to CME Holdings’ board of directors related to the CBOT Transaction, (ii) served as Lead Dealer Manager on CME Holdings’ tender offer to repurchase shares in connection with the CBOT Transaction, (iii) acted as agent and dealer on CME Group’s commercial paper program, (iv) acted as lead arranger and administrative agent on CME Group’s bridge loan in July 2007, (v) acted as financial advisor for CME Group on its equity exchange with Bolsa De Mercadorias & Futuros—BM&F S.A., or “BM&F,” (vi) served as arranger on CME Group’s Brazilian real hedging transaction in connection with the BM&F equity exchange, (vii) acted as financial advisor for CME Group on its acquisition of Credit Market Analysis Ltd., (viii) acted as co-manager on NYMEX Holdings’ IPO in November 2006 and (ix) acted as co-manager on NYMEX Holdings’ secondary equity offering in March 2007. In addition, Lehman Brothers has been requested by CME Group to assist and participate in any financing necessary for the consummation of the merger and in the event that Lehman Brothers participates in such financing, Lehman Brothers will receive customary fees in connection therewith. Lehman Brothers expects to provide various investment banking and financial services for CME Group in the future and expects to receive fees for such services. In addition, Lehman Brothers currently holds 17 Class B memberships in CBOT and 16 memberships in CME and 16,725 shares in CME Group. Lehman Brothers also holds four NYMEX Class A memberships and two memberships in COMEX, and owns 305,600 shares in NYMEX Holdings. In the ordinary course of its business, Lehman Brothers actively trades in the securities of CME Group and NYMEX Holdings for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

As described above, Lehman Brothers’ opinion to CME Group’s board of directors was one of many factors taken into consideration by CME Group’s board of directors in making its determination to approve the merger. The foregoing summary does not purport to be a complete description of the analyses performed by Lehman Brothers in connection with its fairness opinion and is qualified in its entirety by reference to the written opinion Lehman Brothers attached to this joint proxy statement/prospectus as Annex B.

Opinion of Goldman Sachs, Financial Advisor to CME Group

At the special meeting of the CME Group board of directors on March 16, 2008, Goldman Sachs rendered its oral opinion, subsequently confirmed in writing, to the CME Group board of directors that, as of that date and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth in such opinion, the stock consideration, together with the cash consideration, referred to as the merger consideration,

 

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taken in the aggregate, to be paid by CME Group in respect of each share of NYMEX Holdings common stock in the merger was fair from a financial point of view to CME Group.

Goldman Sachs’ opinion noted and took into consideration the following:

 

•

NYMEX Holdings stockholders have a cash or stock election with respect to the merger consideration, subject to certain procedures and limitations contained in the Merger Agreement (including procedures permitting CME Group, in its sole discretion, to increase the cash consideration and decrease the stock consideration by a corresponding amount, subject to the limitations set forth in the Merger Agreement, as to which procedures and limitations Goldman Sachs did not express any opinion);

 

•

the cash consideration per share is equal to $36.00 plus 0.1323 times the Average CME Group Share Price for each NYMEX Holdings share;

 

•

the stock consideration per share consists of a number of shares of CME Group Class A common stock equal to the cash consideration per share referred to above, divided by the Average CME Group Share Price; and

 

•

pursuant to the membership purchase offer documents, NYMEX will effect the membership purchase offer, for an aggregate purchase price not to exceed $500 million in cash.

The full text of the written opinion of Goldman Sachs, dated March 17, 2008, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken in connection with its opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference. Goldman Sachs provided its opinion for the information and assistance of the CME Group board of directors in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of CME Group Class A or Class B common stock or NYMEX Holdings common stock should vote at any stockholders’ meeting to be held in connection with, or take any action with respect to, the merger.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs has reviewed, among other things:

 

•

the Merger Agreement;

 

•

NYMEX Holdings’ Registration Statements on Form S-1 (including the prospectuses contained therein dated November 2006 and March 2007) relating to NYMEX Holdings’ initial and follow-on offerings of NYMEX Holdings common stock;

 

•

the annual reports to stockholders and Annual Reports on Form 10-K of CME Group and NYMEX Holdings for the three fiscal years ended December 31, 2007;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of CME Group and NYMEX Holdings;

 

•

certain other communications from CME Group and NYMEX Holdings to their respective stockholders;

 

•

certain publicly available research analyst reports for NYMEX Holdings and CME Group;

 

•

certain internal financial analyses and forecasts for NYMEX Holdings prepared by its management;

 

•

certain internal financial analyses and forecasts for CME Group prepared by its management; and

 

•

certain financial analyses and forecasts for NYMEX Holdings prepared by the management of CME Group, including certain cost savings and operating synergies projected by the management of CME Group to result from the transaction.

 

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Goldman Sachs also held discussions with members of the senior management of CME Group and NYMEX Holdings regarding their assessment of the past and current business operations, financial condition and future prospects of NYMEX Holdings and with the members of senior management of CME Group regarding their assessment of the past and current business operations, financial condition and future prospects of CME Group and the strategic rationale for, and the potential benefits of, the transaction. In addition, Goldman Sachs reviewed the reported price and trading activity for the shares of CME Group Class A common stock and the shares of NYMEX Holdings common stock, compared certain financial and stock market information for NYMEX Holdings and CME Group with similar financial and stock market information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the financial exchange industry specifically and in other industries generally and performed such other studies and analyses, and considered such other factors, as it considered appropriate.

Goldman Sachs relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it. Goldman Sachs assumed, with the consent of the CME Group board of directors, that the financial analyses and forecasts, including the expected cost savings and operating synergies, were reasonably prepared on a basis reflecting the then best currently available estimates and judgments of the management of CME Group and that the expected cost savings and operating synergies will be realized. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of CME Group or NYMEX Holdings or any of their respective subsidiaries and no such evaluation or appraisal was furnished to Goldman Sachs. Goldman Sachs also has assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transaction will be obtained without any adverse effect on CME Group or NYMEX Holdings or on the expected benefits of the transaction in any way meaningful to its analysis. Goldman Sachs has also assumed that the membership purchase offer will be consummated on the terms required by the Merger Agreement without any waiver, delay or amendment in any way meaningful to its analysis. Goldman Sachs’ opinion did not address any legal, regulatory, tax or accounting matters.

Goldman Sachs’ opinion did not address the underlying business decision of CME Group to engage in the transaction, or the relative merits of the transaction as compared to any strategic alternatives that may be available to CME Group. Goldman Sachs’ opinion addresses only the fairness to CME Group from a financial point of view, as of the date therein, of the merger consideration, taken in the aggregate, to be paid by CME Group in the transaction. Goldman Sachs did not express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or transaction, including, without limitation, the fairness of the transaction to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of CME Group or NYMEX Holdings; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of CME Group or NYMEX Holdings, or class of such persons in connection with the transaction, whether relative to the merger consideration, taken in the aggregate, to be paid in the transaction or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of CME Group Class A common stock will trade at any time. Goldman Sachs’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date therein and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date therein.

Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the CME Group board of directors in connection with its consideration of the transaction and its opinion did not constitute a recommendation as to how any holder of CME Group Class A common stock should vote in respect of the transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs on March 10, 2008, and subsequently updated on March 16, 2008, to the CME Group board of directors in connection with

 

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rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular form. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 16, 2008 and is not necessarily indicative of current market conditions.

Transaction Premium Analysis

Goldman Sachs calculated the implied premium over the market price at various points for each share of NYMEX Holdings common stock. In these calculations, Goldman Sachs utilized an implied transaction price per share of $100.30, which was calculated using an initial exchange ratio of 0.1323 shares of CME Group Class A common stock, cash consideration of $36.00 per share of NYMEX Holdings common stock and the CME Group Class A common stock price of $486.05 based on the March 14, 2008 closing price (the last trading day prior to the announcement of the proposed merger). Goldman Sachs compared the implied transaction price per share of $100.30 with the following prices of NYMEX Holdings common stock:

 

•

the closing price of $95.34 on March 14, 2008 (the last trading day prior to the announcement of the proposed merger);

 

•

the highest closing price of $142.12 since NYMEX Holdings’ initial public offering on November 17, 2006;

 

•

the closing price of $103.70 on January 24, 2008 (two trading days prior to the date on which NYMEX Holdings and CME Group publicly announced they were engaged in preliminary discussions); and

 

•

the average closing price for the 20 trading days up to and including January 24, 2008 (two trading days prior to the date on which NYMEX Holdings and CME Group publicly announced they were engaged in preliminary discussions).

The results of Goldman Sachs’ calculations are reflected below:

 

Implied Transaction Price as Premium to:
Most Recent Closing Price of NYMEX Holdings Common Stock		5.2	%
High Closing Price Since NYMEX Holdings IPO		(29.4	)%
Closing Price of NYMEX Holdings Common Stock Two Trading Days Prior to Announcement of Preliminary Discussions		(3.3	)%
20-Trading Day Average Closing Price of NYMEX Holdings Common Stock Starting Two Trading Days Prior to Announcement of Preliminary Discussions		(14.4	)%

 

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Historical Exchange Ratio Analysis

Goldman Sachs reviewed the historical exchange ratios determined by dividing the closing price of NYMEX Holdings common stock by the closing price of CME Group Class A common stock over the period from November 17, 2006, the date of NYMEX Holdings’ initial public offering, through and including March 14, 2008, the last trading day prior to the announcement of the proposed merger. Goldman Sachs compared the results of this analysis against the implied exchange ratio of 0.2064x, which is based on the implied transaction price per share of NYMEX Holdings common stock of $100.30 and the closing price for CME Group Class A common stock as of March 14, 2008 of $486.05. The following table presents the results of these calculations:

 

		Historical Implied Exchange Ratios of NYMEX Holdings Common Stock to CME Group Class A Common Stock
March 14, 2008		0.1962x
High		0.2572x
Low		0.1633x
Average		0.2189x

Historical Price / Next Twelve Months Estimated Earnings Per Share Analysis

Goldman Sachs reviewed and compared the historical daily closing share prices as a multiple of the next twelve months EPS estimates (based on market data from FactSet and median EPS estimates from IBES) for the period from March 7, 2003 through and including March 7, 2008 of NYMEX Holdings common stock and CME Group Class A common stock, IntercontinentalExchange, Inc., or “ICE,” common stock, and indices named “U.S. Cash Exchanges Index” and “Selected International Exchanges Index” comprised of the following publicly traded exchanges:

 

U.S. Cash Exchanges Index		Selected International Exchanges Index
NYSE Euronext		Deutsche Börse AG
NASDAQ OMX Group, Inc.		Hong Kong Exchanges & Clearing Limited
		Bovespa Holding SA
		London Stock Exchange Group plc
		Singapore Exchange Limited
		ASX Limited
		Bolsas y Mercados Espanoles SA
		TSX Group, Inc.

The results of the analyses are summarized below:

 

Average Price / Next Twelve Months EPS (1)(2)

2003

2004

2005

2006

2007

2008

CME Group

17.2x

23.7x

29.2x

36.1x

34.3x

28.4x

NYMEX Holdings

—

—

—

42.8x

41.8x

28.0x

ICE

—

—

—

35.7x

35.1x

27.0x

U.S. Cash Exchanges Index

—

26.0x

33.0x

34.8x

25.6x

20.7x

Selected International Exchanges Index

16.8x

17.1x

19.5x

22.9x

21.7x

20.0x

(1)	All 2008 information is presented as of March 7, 2008 year-to-date.

(2)	Based on market data from FactSet and median EPS estimates from IBES.

 

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Selected Exchanges Analysis

Goldman Sachs reviewed and compared certain financial information for NYMEX Holdings to corresponding publicly available financial information, ratios and multiples for selected peer exchanges in three categories: (i) U.S. derivatives exchanges, which is comprised of NYMEX Holdings, CME Group and ICE, (ii) the exchanges comprising the U.S. Cash Exchanges Index and (iii) the exchanges comprising the Selected International Exchanges Index. Although none of the selected exchanges is directly comparable to NYMEX Holdings, the companies included were chosen because they are publicly traded companies with operations that, for purposes of analysis, may be considered similar to certain operations of NYMEX Holdings.

The multiples and ratios of the selected exchanges were based on market data as of March 14, 2008, information obtained from publicly available information and estimates from IBES. The multiples and ratios were calculated on a fully diluted basis. With respect to NYMEX Holdings, CME Group and the selected exchanges, Goldman Sachs calculated the following:

 

•

enterprise value as a multiple of LTM EBITDA;

 

•

enterprise value as a multiple of 2008E and 2009E EBITDA; and

 

•

the price earnings ratio for 2008E and 2009E.

 

		Enterprise Value/ EBITDA (1)						Calendarized P/E Multiples (1)
		LTM		2008		2009		2008		2009
NYMEX Holdings		20.8x		13.9x		11.6x		26.7x		20.7x
CME Group		18.1x		13.8x		11.5x		25.0x		19.9x
U.S. Derivatives Exchanges
Low		18.1x		13.8x		11.5x		25.0x		19.9x
Median		20.8x		13.9x		11.6x		26.2x		20.2x
High		23.9x		15.6x		12.6x		26.7x		20.7x
U.S. Cash Exchanges Index
Low		13.9x		10.2x		8.8x		18.0x		14.4x
Median		14.2x		11.2x		9.9x		18.4x		15.4x
High		14.5x		12.3x		11.0x		18.9x		16.4x
Selected International Exchanges Index
Low		10.7x		7.3x		7.2x		12.0x		11.6x
Median		15.0x		11.2x		10.1x		15.6x		13.9x
High		21.2x		17.2x		16.6x		25.5x		19.7x

(1)	Based on publicly available information and median estimates from IBES.

Discounted Cash Flow Analysis

Goldman Sachs performed an illustrative discounted cash flow analysis, using CME Group management’s projections for NYMEX Holdings, to determine ranges of implied present values per share of NYMEX Holdings common stock. Goldman Sachs calculated the implied net present values of projected free cash flows for NYMEX Holdings, as provided by CME Group’s management, for fiscal years 2008 through 2017 using discount rates ranging from 10% to 12% and terminal value perpetuity growth rates of 3% to 5%. The analysis, based on the forecasts, resulted in an implied standalone NYMEX Holdings equity value per share range from $103.38 to $173.61.

Goldman Sachs also performed an illustrative discounted cash flow analysis of NYMEX Holdings on a pro forma basis, using three alternative forecasts for NYMEX Holdings provided by CME Group management. The

 

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first such sensitivity case included cost and revenue synergies, net of one-time costs associated with the transaction. The second sensitivity case included synergies, net of one-time costs associated with the transaction, and other pro forma adjustments related to the merger as developed by CME Group management. Lastly, the third sensitivity case included synergies, net of one-time costs associated with the transaction, the foregoing pro forma adjustments related to the merger as developed by CME Group management and estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer. For each sensitivity case, Goldman Sachs calculated the implied net present values of projected free cash flows for NYMEX Holdings, as provided by CME Group’s management, for fiscal years 2008 through 2017, using discount rates ranging from 10% to 12% and terminal value perpetuity growth rates of 3% to 5%. The analyses resulted in an implied NYMEX Holdings equity value per share range from $106.81 to $180.38 with synergies, net of one-time costs associated with the transaction, a range of $103.92 to $177.63 with synergies, net of one-time costs associated with the transaction, and the foregoing pro forma adjustments related to the merger, and lastly, a range of $106.75 to $181.53 with synergies, net of one-time costs associated with the transaction, the foregoing pro forma adjustments related to the merger, and estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer.

Internal Rate of Return Analysis

Goldman Sachs performed an illustrative analysis of the implied internal rates of return that could theoretically be realized by an acquiror of NYMEX Holdings by utilizing projections of NYMEX Holdings’ free cash flows for fiscal years 2008 through 2017 as estimated by CME Group’s management. These projections include the synergies, net of one-time costs associated with the transaction, projected to result from the merger and other pro forma adjustments related to the merger as developed by CME Group management. When calculating the terminal value of free cash flows on a pro-forma basis, Goldman Sachs applied discount rates ranging from 10% to 12% and terminal value perpetuity growth rates ranging from 3% to 5%. Based on the foregoing estimates and assumptions, Goldman Sachs calculated that an acquiror of NYMEX Holdings would realize implied internal rates of return with a range from 12.8% to 18.4% excluding income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer and a range from 13.2% to 18.8% including income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer.

 

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Contribution Analysis

Goldman Sachs reviewed market capitalization information for CME Group and NYMEX Holdings and specific historical and estimated future operating information including, among other information, 2007A (LTM), estimated 2008, 2009 and 2010 revenue, EBITDA, pre-tax earnings and net income for CME Group and NYMEX Holdings, based on publicly available information and projections prepared by CME Group management. Goldman Sachs noted that the market value of NYMEX Holdings, as indicated by the implied offer price for NYMEX Holdings, represented 25.9% of the market value of the combined company based on the implied transaction price per share of $101.01 as of March 7, 2008. Goldman Sachs also noted that the market value of NYMEX Holdings represented 25.1% and 21.9% of the market value of the combined company as of March 7, 2008, and January 24, 2008 (two trading days prior to the date on which NYMEX Holdings and CME Group publicly announced they were engaged in preliminary discussions), respectively. Goldman Sachs then analyzed the relative income statement contributions of CME Group and NYMEX Holdings to the combined company following the merger. The results of this analysis were as follows:

 

		Contribution to Combined Company (%)
		CME Group			NYMEX Holdings
Revenue
LTM		75.9	%		24.1	%
2008E		75.2	%		24.8	%
2009E		75.0	%		25.0	%
2010E		75.0	%		25.0	%
EBITDA
LTM		77.6	%		22.4	%
2008E		76.8	%		23.2	%
2009E		76.7	%		23.3	%
2010E		76.1	%		23.9	%
Pre-Tax Earnings
LTM		77.5	%		22.5	%
2008E		75.2	%		24.8	%
2009E		75.4	%		24.6	%
2010E		75.0	%		25.0	%
Net Income
LTM		78.5	%		21.5	%
2008E		76.7	%		23.3	%
2009E		76.9	%		23.1	%
2010E		76.6	%		23.4	%
High		78.5	%		25.0	%
Median		76.3	%		23.7	%
Low		75.0	%		21.5	%
Market Value (Implied Offer Price)		74.1	%		25.9	%
Market Value (As of March 7, 2008)		74.9	%		25.1	%
Market Value (As of Two Trading Days Prior to Public Announcement of Preliminary Discussions)		78.1	%		21.9	%

 

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Comparison of Selected Exchange Transactions

Goldman Sachs analyzed certain publicly available information relating to the following selected completed and pending transactions in the financial exchange industry since 2001:

 

Announcement Date		Buyer		Target
December 10, 2007		TSX Group, Inc. (*)		Bourse de Montreal Inc.
September 20, 2007		NASDAQ Stock Market, Inc. and Borse Dubai Limited		OMX AB
June 23, 2007		London Stock Exchange plc		Borsa Italiana S.p.A.
June 14, 2007		Chicago Mercantile Exchange Holdings Inc. (*)		CBOT Holdings, Inc.
April 30, 2007		Eurex Frankfurt AG (*)		International Securities Exchange
September 14, 2006		IntercontinentalExchange, Inc. (*)		Board of Trade of the City of New York, Inc.
May 22, 2006		NYSE Group, Inc.		Euronext N.V.
March 27, 2006		Australian Stock Exchange Ltd (*)		Sydney Futures Exchange Corp. Ltd
March 10, 2006		NASDAQ Stock Market, Inc.		London Stock Exchange plc (25% stake)
April 20, 2005		New York Stock Exchange, Inc.		Archipelago Holdings, Inc.
October 29, 2001		Euronext N.V. (*)		London International Financial Futures and Options Exchange (LIFFE)

(*)	Derivatives Exchange Transactions

Although none of the selected transactions or the exchanges party to the transactions is directly comparable to the proposed merger or to CME Group or NYMEX Holdings, the above transactions were chosen because they involve transactions that, for purposes of analysis, may be considered similar to the proposed merger and/or involve publicly traded exchanges with operations that, for purposes of analysis, may be considered similar to certain operations of CME Group and NYMEX Holdings.

For each of the selected transactions, Goldman Sachs calculated and, to the extent information was publicly available, compared enterprise value as a multiple of each of revenues, EBITDA and equity value as a multiple of net income and compared such multiples to the CME Group/NYMEX Holdings transaction value multiples. The following table presents the results of this analysis:

 

		Implied Transaction Value as Multiple of LTM
		Revenues		EBITDA		Net Income
All Transactions
Low		2.6x		13.5x		27.6x
Median		10.3x		23.9x		47.2x
High		15.5x		34.9x		82.5x
Selected Derivatives Exchange Transactions
Low		6.3x		23.9x		31.8x
Median		13.4x		27.0x		50.4x
High		15.5x		34.9x		82.5x
CME/NYMEX Transaction
CME Group/NYMEX Holdings (excluding cost of membership purchase offer)		13.6x		21.6x		40.2x
CME Group/NYMEX Holdings (including cost of membership purchase offer)		14.3x		22.8x		42.4x

 

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Goldman Sachs also calculated the premiums paid based on the average closing stock price of the target for the five trading days prior to the announcement of each transaction, and premiums paid based on the average closing stock price of the target for the 20 trading days prior to the announcement of each transaction, and compared such premiums to the premium derived from the implied equity value per share of NYMEX Holdings common stock as of March 7, 2008. The following table presents the results of this analysis:

 

		Premium 20-day average			Premium 5-day average
All Transactions
Low		1.4	%		4.7	%
Median		33.6	%		30.3	%
High		73.0	%		77.0	%
Selected Derivatives Exchange Transactions
Low		23.3	%		13.2	%
Median		33.6	%		29.4	%
High		59.9	%		53.5	%
CME/NYMEX Transaction
CME Group/NYMEX Holdings (excluding cost of membership purchase offer)		3.7	%		18.8	%
CME Group/NYMEX Holdings (including cost of membership purchase offer)		3.7	%		18.8	%

Pro Forma EPS Accretion/Dilution Analysis

Goldman Sachs prepared illustrative pro forma EPS accretion/dilution analyses of the proposed merger on CME Group using estimates and projections provided by CME Group management. Goldman Sachs compared, for each of fiscal years 2009E and 2010E, the forecast EPS of CME Group on a generally accepted accounting principles, or “GAAP,” EPS and cash EPS standalone basis, in relation to the estimated GAAP EPS and the estimated cash EPS of the combined company. The analysis indicated that the transaction would be accretive on a cash EPS basis in 2009E and 2010E with or without the receipt of estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer and would range from neutral to accretive on a GAAP EPS basis in 2009E and 2010E with or without estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer.

In conducting its EPS accretion/dilution analyses, Goldman Sachs analyzed three alternative cash scenarios, which covered a range of possible cash consideration amounts based on the current implied transaction consideration and the structure of the transaction: a minimum cash case, a medium cash case and a high cash case (the primary differences of which, are the amount of cash consideration to be paid to NYMEX Holdings stockholders). In each of the three alternative cash scenarios, Goldman Sachs conducted a sensitivity analysis using revenue and cost synergies that ranged from 0% to 100% of CME Group management’s synergy estimates.

In the minimum cash case, the analysis indicated that in 2009E, the transaction would range from slightly dilutive to neutral when excluding the estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer and would range from slightly dilutive to slightly accretive when including the estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer. The analysis further indicated that the transaction would be accretive in 2010E with or without the inclusion of estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer.

Goldman Sachs’ analyses indicated that the transaction would be increasingly accretive in 2009E and 2010E in each of the medium and high cash cases, with or without the inclusion of estimated income derived from NYMEX trading permits and potential tax benefits related to the membership purchase offer.

 

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The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to CME Group, NYMEX Holdings or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to the CME Group board of directors that, as of March 17, 2008, and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth in such opinion, the merger consideration, taken in the aggregate, to be paid by CME Group in respect of each share of NYMEX Holdings common stock in the merger was fair from a financial point of view to CME Group. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of CME Group, NYMEX Holdings, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arms-length negotiations between CME Group and NYMEX Holdings and was approved by the CME Group board of directors. Goldman Sachs provided advice to CME Group during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to CME Group or its board of directors or that any specific amount of merger consideration constituted the only appropriate consideration for the merger.

As described above, the opinion of Goldman Sachs to the CME Group board of directors was one of many factors taken into consideration by the CME Group board of directors in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C to this joint proxy statement/prospectus.

Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. Goldman Sachs has acted as financial advisor to CME Group in connection with, and has participated in certain of the negotiations leading to, the transaction contemplated by the Merger Agreement. In addition, Goldman Sachs has provided certain investment banking and other financial services to CME Group, NYMEX Holdings and their affiliates from time to time, for which Goldman Sachs has received, and may receive, compensation. Goldman Sachs also may provide investment banking and other financial services to CME Group, NYMEX Holdings and their respective affiliates in the future for which Goldman Sachs may receive compensation. In addition, Goldman Sachs and its affiliates hold 14 Class B memberships in CBOT and 36 memberships in CME. Goldman Sachs and its affiliates also hold five NYMEX Class A memberships, seven memberships in COMEX, and one COMEX options membership seat. In addition, Goldman Sachs and its affiliates may hold NYMEX trading permits and COMEX memberships in the future. In connection therewith, Goldman Sachs and such affiliates pay regular trading fees to, and are subject to the regulations of, CME Group and NYMEX.

Goldman Sachs is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment banking and financial advisory, investment management, principal investment, hedging, financing and brokerage activities and financial planning and benefits counseling for both companies and

 

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individuals. In the ordinary course of these activities, Goldman Sachs and its affiliates may provide such services to CME Group, NYMEX Holdings and their respective affiliates, and may at any time make or hold long or short positions and investments, as well as actively trade or effect transactions in the equity, debt and other securities (or related derivative securities) and financial instruments (including bank loans and other obligations) of CME Group and NYMEX Holdings, and any of their respective affiliates or any currency or commodity that may be involved in the transaction contemplated by the Merger Agreement for their own account and for the accounts of their customers.

The CME Group board of directors selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the contemplated transaction. Pursuant to a letter agreement, dated February 21, 2008, CME Group engaged Goldman Sachs to act as its financial advisor in connection with the transaction. Pursuant to the terms of this letter agreement, CME Group has agreed to pay Goldman Sachs a transaction fee of $10 million upon consummation of the merger. In addition, CME Group has agreed to reimburse Goldman Sachs’ expenses incurred in connection with this engagement and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Opinion of William Blair, Financial Advisor to CME Group

William Blair acted as financial advisor to CME Group in connection with the merger. As part of its engagement, CME Group requested that William Blair render an opinion as to whether the merger consideration to be paid by CME Group was fair, from a financial point of view, to CME Group. On March 16, 2008, William Blair delivered its oral opinion to the CME Group board of directors and subsequently confirmed in writing that, as of such date and based upon and subject to the assumptions and qualifications stated in its opinion, the merger consideration was fair, from a financial point of view, to CME Group.

The full text of William Blair’s written opinion, dated March 16, 2008, is attached as Annex D to this joint proxy statement/prospectus and incorporated into this joint proxy statement/prospectus by reference. We urge holders of CME Group common stock to read the entire opinion carefully to learn about the assumptions made, procedures followed, matters considered and limits on the scope of the review undertaken by William Blair in rendering its opinion. William Blair’s opinion relates only to the fairness, from a financial point of view, to CME Group of the consideration to be paid by CME Group in the merger, does not address any other aspect of the proposed merger or any related transaction, and does not constitute a recommendation to any stockholder as to how that stockholder should vote with respect to the Merger Agreement or the merger. William Blair did not address the merits of the underlying decision by CME Group to engage in the merger. The following summary of William Blair’s opinion is qualified in its entirety by reference to the full text of the opinion.

William Blair provided the opinion described above for the information and assistance of the CME Group board of directors in connection with its consideration of the merger. The terms of the Merger Agreement and the amount and form of the merger consideration, however, were determined through negotiations between CME Group and NYMEX Holdings, and were approved by the CME Group board of directors. William Blair provided financial advice to CME Group during such negotiations. However, William Blair did not recommend any specific exchange ratio or other form of consideration to CME Group, or that any specific exchange ratio or other form of consideration constituted the only appropriate consideration for the proposed merger.

In connection with its opinion, William Blair, among other things:

 

•

reviewed the draft Merger Agreement dated March 16, 2008;

 

•

reviewed certain audited historical financial statements of CME Group and NYMEX Holdings for the three fiscal years ended December 31, 2007, as filed with the SEC;

 

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•

reviewed certain internal business, operating and financial information and forecasts of CME Group for fiscal years 2008 through 2010 and NYMEX Holdings for fiscal years 2008 through 2018 developed by the senior management of CME Group, or for purposes of this section, the “Forecasts”;

 

•

reviewed information regarding the strategic, financial and operational benefits anticipated from the merger and the prospects of CME Group (with and without the merger) developed by the senior management of CME Group;

 

•

reviewed information regarding the amount and timing of incremental revenue synergies and cost savings and related expense synergies which the senior management of CME Group expects will result from the merger, or the “Expected Synergies”;

 

•

reviewed the pro forma impact of the merger on the earnings per share of CME Group (before and after taking into consideration any Expected Synergies, adjustments for the repurchase of NYMEX Class A memberships and adjustments for the intangible asset amortization created as a result of the merger) based on certain pro forma financial information prepared by the senior management of CME Group;

 

•

reviewed information regarding publicly available financial terms of certain other business combinations William Blair deemed relevant;

 

•

reviewed the financial position and operating results of NYMEX Holdings compared with those of certain other publicly traded companies William Blair deemed relevant;

 

•

reviewed current and historical market prices and trading volumes of the Class A common stock of CME Group and the common stock of NYMEX Holdings; and

 

•

performed such other financial analyses and considered such other information as William Blair deemed appropriate for the purposes of its opinion.

William Blair also held discussions with members of the senior management of CME Group and NYMEX Holdings to discuss the foregoing, and took into account the accepted financial and investment banking procedures and considerations that it deemed relevant.

In rendering its opinion, William Blair assumed and relied, without independent verification, upon the accuracy and completeness of all the information reviewed by or discussed with William Blair for purposes of its opinion, including without limitation the Forecasts developed by the senior management of CME Group. William Blair did not make or obtain an independent valuation or appraisal of the assets, liabilities or solvency of CME Group or NYMEX Holdings. William Blair was advised by the senior management of CME Group that the Forecasts and Expected Synergies examined by William Blair were reasonably prepared on bases reflecting the best estimates then available and judgments of the senior management of CME Group. In that regard, William Blair assumed, with the consent of CME Group’s board of directors, that (i) the Forecasts would be achieved in the amounts and at the times contemplated thereby, and (ii) all material assets and liabilities (contingent or otherwise) of CME Group and NYMEX Holdings were as set forth in each company’s respective financial statements or other information made available to William Blair. William Blair expressed no opinion with respect to the Forecasts, Expected Synergies, or the estimates and judgments on which they were based. William Blair did not analyze any forecasts of CME Group for periods after 2010. William Blair was not provided with, nor did it otherwise analyze, any forecasts of NYMEX Holdings for periods after 2018.

William Blair’s opinion did not address the relative merits of the merger as compared to any alternative business strategies that might exist for CME Group or the effect of other transactions in which CME Group might engage. William Blair’s opinion was based upon economic, market, financial and other conditions existing on, and other information disclosed to William Blair as of, March 16, 2008. Although developments subsequent to March 16, 2008 may affect its opinion, William Blair does not have any obligation to update, revise or reaffirm its opinion. William Blair relied as to all legal, accounting and tax matters on advice of advisors to CME Group, and assumed that the executed Merger Agreement would substantially conform to, and the merger would be consummated on, the terms described in the draft Merger Agreement reviewed by it, without any amendment or waiver of any material terms or conditions.

 

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William Blair did not express any opinion as to the price at which the Class A common stock of CME Group will trade at any future time or as to the effect of the announcement of the merger on the trading price of the Class A common stock of CME Group. William Blair noted that the trading price may be affected by a number of factors, including but not limited to:

 

•

dispositions of the Class A common stock of CME Group by stockholders within a short period of time after the effective time of the merger;

 

•

changes in prevailing interest rates and other factors which generally influence the price of securities;

 

•

adverse changes in the capital markets from the date on which the opinion was delivered;

 

•

the occurrence of adverse changes in the financial condition, business, assets, results of operations or prospects of CME Group or NYMEX Holdings or in their respective target markets;

 

•

any actions by or restrictions of federal, state or other governmental agencies or regulatory authorities; and

 

•

timely completion of the merger on the terms and conditions that are acceptable to all parties in interest.

The following is a summary of the material financial analyses performed and material factors considered by William Blair to arrive at its opinion. William Blair performed certain procedures, including each of the financial analyses described below, and reviewed with CME Group’s board of directors the assumptions upon which such analyses were based, as well as other factors. Although the summary does not purport to describe all of the analyses performed or factors considered by William Blair in this regard, it does set forth those considered by William Blair to be material in arriving at its opinion.

Discounted Cash Flow Analysis. William Blair utilized the Forecasts to perform a discounted cash flow analysis of NYMEX Holdings’ projected future cash flows for the period commencing on January 1, 2008 and ending December 31, 2017. Using discounted cash flow methodology, William Blair calculated the present values of the projected free cash flows for NYMEX Holdings. In this analysis, William Blair assumed that NYMEX Holdings’ free cash flows would grow in perpetuity beyond 2017 at an annual growth rate ranging from 3% to 5% reflecting historical and forecasted growth rates for U.S. economic activity. William Blair further assumed an annual discount rate ranging from 10% to 12%. William Blair determined the appropriate discount range based upon an analysis of the weighted average cost of capital of NYMEX Holdings. William Blair aggregated (i) the present value of the free cash flows over the applicable forecast period with (ii) the present value of the range of terminal values. The aggregate present value of these items represented the enterprise value range. An equity value was determined by adding back the amount of net cash at December 31, 2007 based on NYMEX Holdings’ 2007 Annual Report on Form 10-K. The implied range of equity values for NYMEX Holdings implied by the discounted cash flow analysis ranged from approximately $9.5 billion to $16.2 billion, as compared to the implied equity value for NYMEX Holdings of approximately $9.5 billion.

In addition, William Blair performed a discounted cash flow analysis to calculate the present values of the projected free cash flows for NYMEX Holdings, including the Expected Synergies and pro forma adjustments related to the merger as developed by the senior management of CME Group. William Blair applied a range of perpetuity growth rates of 3% to 5% and discounted the free cash flows and the estimated terminal value to present values at a range of discount rates from 10% to 12%.

Based on the projections and assumptions set forth above, the discounted cash flow analysis of NYMEX Holdings, including the Expected Synergies and certain pro forma adjustments related to the merger as prepared by the senior management of CME Group, yielded an implied range of equity values for NYMEX Holdings from approximately $10.3 billion to $17.7 billion, as compared to the implied equity value for NYMEX Holdings of approximately $9.5 billion.

 

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Earnings Accretion/Dilution Analysis. William Blair analyzed certain pro forma effects resulting from the merger, including the potential impact of the merger on projected 2009 and 2010 GAAP and cash earnings per share of CME Group following the merger. All analyses assumed a September 30, 2008 closing. William Blair utilized NYMEX Holdings’ and CME Group’s earnings for 2008 and 2009 according to the Forecasts provided by CME Group. William Blair’s analysis included assumptions regarding, among other matters, various structural considerations, the anticipated repurchase for $500 million of all 816 NYMEX Class A memberships to be paid by NYMEX prior to closing, the estimated allocation of purchase price to amortizable intangible assets, as well as pro forma adjustments including trading permit income from NYMEX and Expected Synergies, all of which were provided by CME Group’s management. The analysis indicated that the impact on GAAP earnings per share for 2009 would be dilutive without consideration of the pro forma adjustments for trading rights sale income and without consideration of Expected Synergies. The analysis indicated that the impact on GAAP earnings per share for 2010 would be accretive without consideration of the pro forma adjustments for trading rights sale income and without consideration of Expected Synergies. Furthermore, the analysis indicated that the impact on GAAP earnings per share would be accretive in 2009 and 2010 with consideration of pro forma adjustments for trading rights sale income and with consideration of Expected Synergies. The analysis indicated that the impact on cash earnings per share would be accretive in 2009 and 2010, both with and without consideration of the pro forma adjustments for trading rights sale income and with and without Expected Synergies.

Premiums Paid Analysis. William Blair reviewed data from 152 acquisitions of publicly traded companies occurring since January 1, 2003 and with transaction values greater than $1 billion, excluding transactions which were financed with 100% cash consideration. Specifically, William Blair analyzed the acquisition price per share as a premium to the closing share price one day, one week, and four weeks prior to the announcement of the transaction for a subgroup of all 152 transactions that were financed with a combination of both cash and stock and for a subgroup of those transactions that were all stock-for-stock transactions. William Blair compared the mean of the resulting stock price premiums for the reviewed transactions to the premiums implied by the merger based on NYMEX Holdings’ stock price one day, one week, and four weeks prior to January 24, 2008. Information regarding the premiums from William Blair’s analysis of selected transactions is set forth in the following table:

 

		Mean of Transaction Premiums
Premium Period		Cash / Stock Transactions			Stock-for-Stock Transactions			Implied Transaction Premium
One Day		20.9	%		16.1	%		15.7	%
One Week		22.5	%		18.5	%		33.5	%
Four Weeks		25.4	%		19.7	%		(9.5	%)

William Blair noted that the premiums implied by the transaction were below the mean of the premiums paid for the referenced transaction groups for each of the one day and four week time periods. William Blair further noted that the premium implied by the transaction was above the mean of the premiums paid for the referenced transaction groups for the one week time period.

Selected Public Company Analysis. William Blair reviewed and compared certain financial information relating to NYMEX Holdings to corresponding financial information, ratios and public market multiples for publicly traded companies with market capitalizations in excess of $1 billion, with operations in the exchange industry and with similar business characteristics. The companies selected by William Blair were:

 

•

Australian Securities Exchange Limited;

 

•

Bolsas & Mercados Españoles S.A.;

 

•

Bursa Malaysia Berhad;

 

•

CME Group Inc.;

 

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•

Deutsche Börse AG;

 

•

Hong Kong Exchanges and Clearing Limited;

 

•

IntercontinentalExchange, Inc.;

 

•

London Stock Exchange plc;

 

•

Montreal Exchange Inc.;

 

•

NASDAQ OMX Group Inc.;

 

•

NYMEX Holdings, Inc.;

 

•

NYSE Euronext;

 

•

OMX AB;

 

•

Singapore Exchange Ltd.; and

 

•

TSX Group, Inc.

Among the information William Blair considered were EBITDA, earnings before interest and taxation, or “EBIT,” and EPS. William Blair considered the enterprise value as a multiple of EBITDA and EBIT for each company for the last twelve months for which results were publicly available and for the respective calendar year EBITDA and EBIT estimates for 2008 and 2009, and the share price as a multiple of EPS for each company for the LTM and for the respective calendar year EPS estimates for 2008 and 2009. The operating results and the corresponding derived multiples for NYMEX Holdings and each of the selected companies were based on each company’s most recent available publicly disclosed financial information, closing share prices as of March 14, 2008 and consensus Wall Street analysts’ EPS estimates for calendar years 2008 and 2009 where appropriate. William Blair noted that it did not have access to internal forecasts for any of the selected public companies, except CME Group. The implied enterprise value of the transaction is based on the equity value implied by the purchase price plus the total debt, less any excess cash and cash equivalents at December 31, 2007 based on NYMEX Holdings’ 2007 Annual Report on Form 10-K.

William Blair then compared the implied transaction multiples for NYMEX Holdings to the range of trading multiples for the selected companies. Information regarding the range of multiples from William Blair’s analysis of selected publicly traded companies is set forth in the following table:

 

		Selected Public Company Valuation Multiples						Implied Transaction Multiple
		Min		Median		Max
		($ in millions)
Enterprise Value/LTM EBITDA		4.2x		16.9x		24.9x		22.7x
Enterprise Value/2008E EBITDA		3.3x		13.0x		21.1x		16.4x
Enterprise Value/2009E EBITDA		3.1x		10.5x		18.0x		12.9x
Enterprise Value/LTM EBIT		4.3x		19.4x		27.5x		23.4x
Enterprise Value/2008E EBIT		3.4x		14.4x		24.0x		16.9x
Enterprise Value/2009E EBIT		3.1x		11.3x		21.5x		13.1x
Equity Value/LTM Net Income		16.0x		30.8x		40.0x		42.3x
Equity Value/2008E Net Income		12.2x		19.4x		35.6x		29.5x
Equity Value/2009E Net Income		12.6x		16.2x		29.3x		22.8x

William Blair noted that the implied transaction multiples based on the terms of the merger were generally within the range of multiples of the selected public companies.

Although William Blair compared the trading multiples of the selected companies as of March 14, 2008 and applied such multiples to NYMEX Holdings, none of the selected companies is identical to NYMEX Holdings.

 

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Accordingly, any analysis of the selected publicly traded companies necessarily involved complex considerations and judgments concerning the differences in financial and operating characteristics and other factors that would necessarily affect the analysis of trading multiples of the selected publicly traded companies.

Selected M&A Transactions Analysis. William Blair performed an analysis of selected recent business combinations consisting of transactions announced subsequent to January 1, 2001 and focused primarily on the exchange industry and transactions having similar business characteristics. William Blair’s analysis was based solely on publicly available information regarding such transactions. The selected transactions were not intended to be representative of the entire range of possible transactions in the respective industries. The transactions examined were (target/acquiror):

 

•

Montreal Exchange Inc./TSX Group, Inc.;

 

•

Philadelphia Stock Exchange, Inc./The Nasdaq Stock Market, Inc.;

 

•

TradeWeb Group LLC/Thomson Corp.;

 

•

OMX AB/Dubai International Financial Centre;

 

•

OMX AB/The Nasdaq Stock Market, Inc.;

 

•

International Securities Exchange Holdings, Inc./Deutsche Börse AG;

 

•

Borsa Italiana S.p.A./London Stock Exchange plc;

 

•

Winnipeg Commodity Exchange Inc./IntercontinentalExchange, Inc.;

 

•

Currenex Inc./State Street Corp.;

 

•

CBOT Holdings, Inc./Chicago Mercantile Exchange Holdings Inc.;

 

•

Euronext N.V./NYSE Group, Inc.;

 

•

Board of Trade of the City of New York, Inc. /IntercontinentalExchange, Inc.;

 

•

SFE Corp. Ltd./Australian Stock Exchange Ltd.;

 

•

EBS Group Limited/ICAP plc;

 

•

London Stock Exchange plc/The Nasdaq Stock Market, Inc.;

 

•

Archipelago Holdings, Inc./New York Stock Exchange, Inc.;

 

•

INET ECN/The Nasdaq Stock Market, Inc.;

 

•

London Clearing House Limited/Clearnet SA;

 

•

Island ECN/Instinet Group Incorporated;

 

•

Clearstream Banking SA/Deutsche Börse AG; and

 

•

London International Financial Futures and Options Exchange/Euronext N.V.

William Blair reviewed the consideration paid in the selected transactions in terms of the enterprise value of such transactions as a multiple of EBITDA and EBIT of the target and the equity value as a multiple of net income of the target for the latest twelve months prior to the announcement of these transactions. William Blair compared the resulting range of transaction multiples of EBITDA, EBIT and net income for the selected transactions to the implied transaction multiples for NYMEX Holdings. Information regarding the range of multiples from William Blair’s analysis of selected transactions is set forth in the following table:

 

		Selected Transaction Valuation Multiples						Implied Transaction Multiple
		Min		Median		Max
Enterprise Value/LTM EBITDA		6.6x		18.2x		36.0x		22.7x
Enterprise Value/LTM EBIT		8.6x		21.9x		66.9x		23.4x
Equity Value/LTM Net Income		11.7x		35.8x		95.7x		42.3x

 

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William Blair noted that the implied transaction multiples based on the terms of the merger were within the range of multiples of the selected transactions.

Although William Blair analyzed the multiples implied by the selected transactions and applied such multiples to NYMEX Holdings, none of these transactions or associated companies is identical to the merger of NYMEX Holdings and CME Group. Accordingly, any analysis of the selected transactions necessarily involved complex considerations and judgments concerning the differences in financial and operating characteristics, parties involved and terms of their transactions and other factors that would necessarily affect the implied value of NYMEX Holdings versus the values of the companies in the selected transactions.

Contribution Analysis. William Blair performed an analysis comparing the relative contributions of CME Group and NYMEX Holdings to the combined pro forma company’s projected 2008, 2009 and 2010 revenue, EBITDA, pre-tax income and net income with and without Expected Synergies and with and without NYMEX trading permit income. Fiscal year 2008, 2009 and 2010 projections for CME Group and NYMEX Holdings were based on the Forecasts developed by CME Group. The Expected Synergies and NYMEX trading permit income were developed by the senior management of CME Group. These relative contribution percentages for NYMEX Holdings, without giving effect to Expected Synergies or NYMEX trading permit income ranged from 23.2% to 25% and were compared to the relative split of the post-transaction common stock shares of NYMEX Holdings after giving effect to the cash consideration of the merger as if paid in CME Group stock of 26%. Furthermore, these relative contribution percentages for NYMEX Holdings, giving effect to Expected Synergies but without NYMEX trading permit income ranged from 23.2% to 26.6% and were compared to the relative split of the post-transaction common stock shares of NYMEX Holdings after giving effect to the cash consideration of the merger as if paid in CME Group stock of 26%. Furthermore, these relative contribution percentages for NYMEX Holdings, giving effect to Expected Synergies and NYMEX trading permit income ranged from 23.4% to 27.1% and were compared to the relative split of the post-transaction common stock shares of NYMEX Holdings after giving effect to the cash consideration of the merger as if paid in CME Group stock of 26%. Such analyses were prepared without regard to purchase accounting adjustments.

General. This summary is not a complete description of the analysis performed by William Blair but contains the material elements of the analysis. The preparation of an opinion regarding fairness is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances, and, therefore, such an opinion is not readily susceptible to partial analysis or summary description. The preparation of an opinion regarding fairness does not involve a mathematical evaluation or weighing of the results of the individual analyses performed, but requires William Blair to exercise its professional judgment, based on its experience and expertise, in considering a wide variety of analyses taken as a whole. Each of the analyses conducted by William Blair was carried out in order to provide a different perspective on the financial terms of the proposed merger and add to the total mix of information available. The analyses were prepared solely for the purpose of William Blair providing its opinion and do not purport to be appraisals or necessarily reflect the prices at which securities actually may be sold. William Blair did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion about the fairness of the consideration to be paid by CME Group. Rather, in reaching its conclusion, William Blair considered the results of the analyses in light of each other and ultimately reached its opinion based on the results of all analyses taken as a whole and in consideration of the process undertaken by CME Group. William Blair did not place particular reliance or weight on any particular analysis, but instead concluded that its analyses, taken as a whole, supported its determination. Accordingly, notwithstanding the separate factors summarized above, William Blair believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all analyses and factors, may create an incomplete view of the evaluation process underlying its opinion. No company or transaction used in the above analyses as a comparison is directly comparable to NYMEX Holdings or the merger. In performing its analyses, William Blair made numerous assumptions with respect to industry performance, business and economic conditions and other matters. The analyses performed by William Blair are not necessarily indicative of future actual values and future results, which may be significantly more or less favorable than suggested by such analyses.

 

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William Blair is a nationally recognized firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with merger transactions and other types of strategic combinations and acquisitions. William Blair is familiar with CME Group, having provided certain investment banking services to CME Group and its board of directors from time to time, including having acted as co-manager for CME Group’s $191 million initial public offering of common stock in December 2002, as co-manager on an $85 million follow-on common stock offering in June 2003, as co-manager on a $138 million follow-on common stock offering in November 2003 (for which William Blair received remuneration of approximately $0.4 million, $0.2 million and $0.5 million, respectively), as a financial advisor to CME Group in connection with its merger with CBOT Holdings, as a financial advisor to CME Group in connection with the sale of the CBOT metals complex (for which William Blair received remuneration of approximately $0.3 million), and as a financial advisor to CME Group in connection with, and having participated in certain of the negotiations leading to, the Merger Agreement. Furthermore, in the ordinary course of its business, William Blair and its affiliates may beneficially own or actively trade common shares and other securities of CME Group or NYMEX Holdings for their own accounts and for the accounts of customers, and, accordingly, may at any time hold a long or short position in these securities. In addition, William Blair provides research coverage for CME Group.

CME Group hired William Blair based on its qualifications and expertise in providing financial advice to companies and its reputation as a nationally recognized investment banking firm. Pursuant to a letter agreement dated January 23, 2008, William Blair was paid $3 million upon the delivery of its opinion, dated March 16, 2008, as to the fairness, from a financial point of view, of the merger consideration to be paid by CME Group. Furthermore, under the terms of the January 23, 2008, letter agreement, William Blair will be entitled to receive an additional fee of $3 million upon consummation of the merger. In addition, CME Group has agreed to reimburse William Blair for certain of its out-of-pocket expenses (including fees and expenses of its counsel) reasonably incurred by it in connection with its services and will indemnify William Blair against potential liabilities arising out of its engagement.

As described above, William Blair’s opinion to CME Group’s board of directors was one of many factors taken into consideration by CME Group’s board of directors in making its determination to approve the merger. The foregoing summary does not purport to be a complete description of the analyses performed by William Blair in connection with its fairness opinion and is qualified in its entirety by reference to the written opinion of William Blair attached as Annex D to this joint proxy statement/prospectus. William Blair’s opinion was approved by a fairness committee of William Blair.

Opinion of JPMorgan, Financial Advisor to NYMEX Holdings

At a meeting of the NYMEX Holdings board of directors on March 16, 2008, JPMorgan rendered its oral opinion, subsequently confirmed in writing, to the NYMEX Holdings board of directors that, as of such date and based upon and subject to the factors, limitations and assumptions set forth in its opinion, the consideration to be received by holders of shares of NYMEX Holdings common stock in the proposed merger of NYMEX Holdings with and into a wholly-owned subsidiary of CME Group, was fair, from a financial point of view, to such holders.

The full text of the written opinion of JPMorgan, dated March 16, 2008, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limits on the opinion and review undertaken in connection with rendering its opinion, is included as Annex E to this joint proxy statement/prospectus and is incorporated herein by reference. Holders of NYMEX Holdings common stock are urged to read the opinion carefully in its entirety.

JPMorgan’s opinion is addressed to the NYMEX Holdings board of directors, is directed only to the consideration in the proposed merger and does not constitute a recommendation to any stockholder of NYMEX Holdings as to how such stockholder should vote with respect to the proposed merger or any other matter. The

 

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summary of the opinion of JPMorgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. JPMorgan’s opinion was authorized for issuance by the fairness opinion committee of JPMorgan.

In arriving at its opinion, JPMorgan, among other things:

 

•

reviewed a draft dated March 16, 2008 of the Merger Agreement;

 

•

reviewed certain publicly available business and financial information concerning NYMEX Holdings and CME Group and the industries in which they operate;

 

•

compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions JPMorgan deemed relevant;

 

•

compared the financial and operating performance of NYMEX Holdings and CME Group with publicly available information concerning certain other companies JPMorgan deemed relevant and reviewed the current and historical market prices of NYMEX Holdings common stock and CME Group Class A common stock and certain publicly traded securities of such other companies;

 

•

reviewed certain internal financial analyses and forecasts prepared by the management of NYMEX Holdings relating to the businesses of NYMEX Holdings and CME Group, as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the proposed merger as provided by NYMEX Holdings, which JPMorgan refers to as the synergies; and

 

•

performed such other financial studies and analyses and considered such other information as JPMorgan deemed appropriate for the purposes of its opinion.

JPMorgan also held discussions with certain members of the managements of NYMEX Holdings and CME Group with respect to certain aspects of the proposed merger, the past and current business operations of NYMEX Holdings and CME Group, the financial condition and future prospects and operations of NYMEX Holdings and CME Group, the effects of the proposed merger on the financial condition and future prospects of NYMEX Holdings and CME Group, and certain other matters JPMorgan believed necessary or appropriate to its inquiry.

In giving its opinion, JPMorgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with JPMorgan by NYMEX Holdings and CME Group or otherwise reviewed by or for JPMorgan, and JPMorgan did not independently verify (nor did JPMorgan assume responsibility or liability for independently verifying) any such information or its accuracy or completeness. JPMorgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did JPMorgan evaluate the solvency of NYMEX Holdings or CME Group under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it or derived therefrom, including the synergies, JPMorgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of NYMEX Holdings and CME Group to which such analyses or forecasts related. JPMorgan expressed no view as to such analyses or forecasts (including the synergies) or the assumptions on which they were based. JPMorgan also assumed that the proposed merger and the other transactions contemplated by the Merger Agreement will qualify as a tax-free reorganization for United States federal income tax purposes, will be consummated as described in the Merger Agreement, without recourse to the provisions of Section 1.13 thereof, and that the definitive Merger Agreement will not differ in any material respects from the draft thereof furnished to JPMorgan. JPMorgan also assumed that the representations and warranties made by NYMEX Holdings and CME Group in the Merger Agreement and the related agreements were and will be true and correct in all respects material to JPMorgan’s analysis. JPMorgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to NYMEX Holdings with respect to such issues. JPMorgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the proposed merger would be obtained without any adverse effect on NYMEX Holdings or CME Group, or on the contemplated benefits of the proposed merger.

 

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JPMorgan’s opinion states that it is necessarily based on economic, market and other conditions as in effect on, and the information made available to JPMorgan as of, the date of its opinion. The opinion also indicates that subsequent developments may affect JPMorgan’s opinion and that JPMorgan does not have any obligation to update, revise, or reaffirm its opinion. The opinion further notes that according to NYMEX Holdings’ public disclosures, holders of NYMEX Holdings common stock who also own NYMEX Class A memberships, will, if voting in the same manner on certain matters submitted to NYMEX Holdings’ stockholders for approval, control the outcome of a vote on such matters, which JPMorgan refers to as the “voting rights.” The opinion also notes that the Merger Agreement contemplates that holders of NYMEX Class A memberships will receive the membership purchase offer to purchase their NYMEX Class A memberships for up to the aggregate purchase price set forth in the Merger Agreement. Apart from assuming the completion of the membership offer on the terms stated in the Merger Agreement, JPMorgan’s opinion does not take into consideration the existence of the voting rights, the NYMEX Class A memberships or the membership purchase offer, or any other right arising out of or relating to NYMEX Class A memberships and their treatment in connection with the proposed merger and is limited to the fairness, from a financial point of view, of the consideration to be received by the holders of NYMEX Holdings common stock in the proposed merger. In giving its opinion, JPMorgan assumed that all outstanding shares of NYMEX Holdings A-3 common stock and NYMEX Holdings B-3 common stock will convert into NYMEX Holdings ordinary common stock in accordance with their terms in May, 2008. JPMorgan expressed no opinion as to the fairness of the proposed merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of NYMEX Holdings or NYMEX or as to the underlying decision by NYMEX Holdings to engage in the proposed merger. Furthermore, JPMorgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger, or any class of such persons relative to the consideration to be received by the holders of NYMEX Holdings common stock in the proposed merger or with respect to the fairness of any such compensation. JPMorgan expressed no opinion as to the price at which NYMEX Holdings common stock or CME Group Class A common stock would trade at any future time.

JPMorgan’s opinion notes that it was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of NYMEX Holdings or any other alternative transaction.

Summary of Certain Financial Analyses Conducted by JPMorgan

In connection with rendering its opinion to the NYMEX Holdings board of directors, JPMorgan performed a variety of financial and comparative analyses:

 

•

historical common stock performance analysis;

 

•

publicly traded comparable company analysis;

 

•

selected transaction analysis;

 

•

discounted cash flow analysis;

 

•

relative contribution analysis; and

 

•

value creation analysis.

The summary set forth below does not purport to be a complete description of the analyses or data presented by JPMorgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. JPMorgan believes that the summary set forth below and its analyses must be considered as a whole and that selecting portions thereof, or focusing on information in tabular format, without considering all of its analyses and the narrative description of the analyses, could create an incomplete view of the processes underlying its analyses and opinion. The order of analyses described does not represent the relative importance or weight given to those analyses by JPMorgan. In arriving at its fairness determination, JPMorgan considered the results of all the analyses and did not attribute any particular weight to any factor or

 

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analysis considered by it; rather, JPMorgan arrived at its opinion based on the results of all the analyses undertaken by it and assessed as a whole. JPMorgan’s analyses are not necessarily indicative of actual values or actual future results that might be achieved, which values may be higher or lower than those indicated. Moreover, JPMorgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 14, 2008 and is not necessarily indicative of current market conditions.

The consideration payable to NYMEX Holdings stockholders in the proposed merger was determined through negotiation between NYMEX Holdings and CME Group and the decision to enter into the Merger Agreement was solely that of NYMEX Holdings and CME Group. JPMorgan’s opinion and financial analyses were only one of the many factors considered by NYMEX Holdings in its evaluation of the proposed merger and should not be viewed as determinative of the views of the NYMEX Holdings board of directors or management with respect to the proposed merger or the merger consideration.

For purposes of its opinion, in deriving the prices per NYMEX Holdings share using the publicly traded comparable company analysis, the comparable transaction analysis, the discounted cash flow analysis and the value creation analysis, JPMorgan assumed that all NYMEX Class A memberships were purchased for $500 million in accordance with the Merger Agreement and that NYMEX Class A memberships acquired by NYMEX Holdings were not leased post transaction.

Historical common stock performance: JPMorgan compared the historical respective trading price performance of NYMEX Holdings common stock over the 52-week period from March 15, 2007 to March 14, 2008 and CME Group Class A common stock over the same time period. During that period, NYMEX Holdings common stock achieved a closing price high of $142.12 per share on June 15, 2007 and a closing price low of $87.88 per share on February 6, 2008. During the same time period, CME Group Class A common stock achieved a closing price high of $710.75 per share and a closing price low of $461.25 per share on December 21, 2007 and March 10, 2008, respectively. JPMorgan noted that the implied exchange ratio as calculated using the daily closing prices of NYMEX Holdings common stock and CME Group Class A common stock over these periods ranged from a low of 0.1633 to a high of 0.2572. This implied exchange ratio was compared to the merger exchange ratio of 0.2064, assuming a 100% stock transaction, based on the closing price of CME Group Class A common stock on March 14, 2008.

Publicly traded comparable company analysis: JPMorgan compared the financial and operating performance of NYMEX Holdings and CME Group with publicly available information of selected publicly traded companies engaged in businesses which JPMorgan deemed relevant to NYMEX Holdings’ and CME Group’s businesses. All of the companies that JPMorgan deemed relevant were included in its analysis. The companies were as follows:

 

•

IntercontinentalExchange, Inc.;

 

•

The Brazilian Mercantile & Futures Exchange-BM&F, S.A.;

 

•

NYSE Euronext;

 

•

The Nasdaq Stock Market, Inc.;

 

•

TSX Group, Inc.;

 

•

Deutsche Börse Group;

 

•

Hong Kong Exchanges and Clearing Ltd.;

 

•

Bovespa Holding, S.A.;

 

•

London Stock Exchange, Plc.;

 

•

Australian Securities Exchange Ltd.;

 

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•

Singapore Exchange Ltd.; and

 

•

Bolsas y Mercados Españoles, S.A.

These companies were deemed relevant because they share similar business and financial characteristics to NYMEX Holdings and CME Group. However, none of the companies selected is identical or directly comparable to NYMEX Holdings or CME Group. Accordingly, JPMorgan further narrowed the list of companies deemed relevant to the publicly traded derivatives exchanges whose primary business and listing is in the U.S. JPMorgan also made judgments and assumptions concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading value of the selected companies.

For each of the selected companies and for NYMEX Holdings and CME Group, JPMorgan divided the company’s closing stock price as of March 14, 2008 by its estimated EPS for the calendar years ending December 31, 2008 and December 31, 2009, the result of which is referred to as “Price/Earnings multiple.” The estimates of EPS for each of the selected companies and for NYMEX Holdings and CME Group were based on publicly available estimates of certain securities research analysts. For each of the selected companies and for NYMEX Holdings and CME Group, JPMorgan divided the Price/Earnings multiples for the years ending December 31, 2008 and December 31, 2009 by each company’s estimated long-term growth rate, referred to as “Price/Earnings to Growth ratios.”

The following table reflects the results of the analysis:

 

Trading multiples analysis		2008E Price/EPS		2009E Price/EPS		2008E PEG		2009E PEG
CME Group Inc.		25.0		19.9		1.3		1.0
NYMEX Holdings, Inc.		26.7		20.9		1.4		1.1
IntercontinentalExchange, Inc.		26.2		20.2		1.2		0.9

Based on the Price/Earnings multiples set forth in the table above, a range of 25.0 to 27.0 was applied to NYMEX Holdings projected 2008 EPS, which implied a valuation for NYMEX Holdings common stock of $79.00 to $86.00 per share. This range applied to CME Group projected 2008 EPS implied a valuation for CME Group Class A common stock of $481.00 to $520.00 per share. JPMorgan noted that the implied range of exchange ratios given these ranges was 0.1523 to 0.1785.

Based on the Price/Earnings multiples set forth in the table above, a range of 19.0 to 21.0 was applied to NYMEX Holdings projected 2009 EPS, which implied a valuation for NYMEX Holdings common stock of $91.00 to $101.00 per share. This range applied to CME Group projected 2009 EPS implied a valuation for CME Group Class A common stock of $483.00 to $534.00 per share. JPMorgan noted that the implied range of exchange ratios given these ranges was 0.1695 to 0.2082.

Based on the Price/Earnings to Growth ratios set forth in the table above, a range of 1.1 to 1.3 was applied to NYMEX Holdings projected 2008 EPS and estimated long-term growth rate, which implied a valuation for NYMEX Holdings common stock of $65.00 to $78.00 per share. This range applied to CME Group projected 2008 EPS and estimated long-term growth rate implied a valuation for CME Group Class A common stock of $402.00 to $476.00 per share. JPMorgan noted that the implied range of exchange ratios given these ranges was 0.1374 to 0.1943.

Based on the Price/Earnings to Growth ratios set forth in the table above, a range of 0.8 to 1.0 was applied to NYMEX Holdings projected 2009 EPS and estimated long-term growth rate, which implied a valuation for NYMEX Holdings common stock of $71.00 to $91.00 per share. This range applied to CME Group projected 2009 EPS and estimated long-term growth rate implied a valuation for CME Group Class A common stock of $387.00 to $483.00 per share. JPMorgan noted that the implied range of exchange ratios given these ranges was 0.1477 to 0.2341.

 

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JPMorgan also noted that the merger exchange ratio was 0.2064, assuming a 100% stock transaction, based on the closing price of CME Group Class A common stock on March 14, 2008.

Selected transaction analysis: JPMorgan performed a selected transaction analysis, which compares the per share merger consideration to be received in the proposed merger to an implied range of per share values for NYMEX Holdings derived from an analysis of selected precedent transactions deemed by JPMorgan to be similar to the proposed merger. Using publicly available information, JPMorgan examined selected transactions within the derivatives exchanges industry that JPMorgan, based on its experience with mergers and acquisitions analysis, deemed relevant to arriving at its opinion. JPMorgan calculated the next-twelve-months EPS, or “NTM EPS,” multiples by dividing the publicly announced equity value per share of each selected transaction by the NTM EPS of the target company prior to the announcement of the transaction. Specifically, JPMorgan reviewed the following transactions:

 

Announcement date		Acquiror		Target		Price/ NTM EPS
11/29/2007		TSX Group, Inc.		Montréal Exchange		33.6
07/06/2007		Chicago Mercantile Exchange Holdings Inc.		CBOT Holdings, Inc.		40.6
04/30/2007		Eurex		International Securities Exchange Holdings, Inc.		35.4
03/15/2007		IntercontinentalExchange, Inc.		CBOT Holdings, Inc.		38.0
10/17/2006		Chicago Mercantile Exchange Holdings Inc.		CBOT Holdings, Inc.		30.7
09/15/2006		IntercontinentalExchange, Inc.		Board of Trade of the City of New York, Inc.		N/A
Median						35.4
Mean						35.7

Based on various judgments concerning the relative comparability of each of the selected transactions to the proposed merger, JPMorgan did not rely solely on the quantitative results of the selected transaction analysis in developing a reference range or otherwise applying its analysis. JPMorgan, based on its experience with mergers and acquisitions and this segment of the derivatives exchanges industry, and using the above transaction multiples as a general guide, selected a range of multiples of equity values per share to NTM EPS that it believed reflected an appropriate range of transaction multiples applicable to NYMEX Holdings. JPMorgan applied a range of comparable transaction multiples of 30.0x to 35.0x to NYMEX Holdings’ NTM EPS, and arrived at an estimated range of equity values for NYMEX Holdings common stock of $96.00 to $113.00.

Discounted cash flow analysis: JPMorgan calculated ranges of implied equity value per share for both NYMEX Holdings common stock and CME Group Class A common stock by performing a discounted cash flow analysis. The discounted cash flow analysis assumed a valuation date of December 31, 2007 and did not take into effect the impact of any synergies as a result of the proposed merger.

A discounted cash flow analysis is a traditional method of evaluating an asset by estimating the future cash flows of an asset and taking into consideration the time value of money with respect to those future cash flows by calculating the “present value” of the estimated future cash flows of the asset. “Present value” refers to the current value of one or more future cash payments, or “cash flows,” from an asset and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macro-economic assumptions, estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. Other financial

 

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terms utilized below are “terminal value,” which refers to the value of all future cash flows from an asset at a particular point in time, and “unlevered free cash flows,” which refers to a calculation of the future cash flows of an asset without including in such calculation any debt servicing costs.

In arriving at the estimated equity values per share of NYMEX Holdings common stock and CME Group Class A common stock, JPMorgan calculated terminal values as of December 31, 2017 by applying a range of perpetual revenue growth rates of 3.5% to 4.5% and a range of discount rates of 11.5% to 13.5%. The unlevered free cash flows from January 1, 2008 through December 31, 2017 and the terminal value were then discounted to present values using a range of discount rates of 11.5% to 13.5% and added together in order to derive the unlevered enterprise values for each of NYMEX Holdings and CME Group. JPMorgan’s decision to use perpetual revenue growth rates of 3.5% to 4.5% was based on its judgment that the long-term growth prospects of NYMEX Holdings, CME Group and the industry in which they participate are superior to the long-term growth prospects of the overall economy. The range of discount rates used by JPMorgan in its analysis was estimated using traditional investment banking methodology, including the analysis of selected publicly traded companies engaged in businesses that JPMorgan deemed relevant to NYMEX Holdings’ and CME Group’s businesses. These publicly traded companies were analyzed to determine the appropriate beta (an estimate of systematic risk) and target debt/total capital ratio to use in calculating the ranges of discount rates described above. The companies analyzed were NYSE Euronext, The Nasdaq Stock Market, Inc., and IntercontinentalExchange, Inc. These North American based companies were selected because they share similar business and financial characteristics to NYMEX Holdings and CME Group.

In arriving at the estimated equity values per share of NYMEX Holdings common stock and CME Group Class A common stock, JPMorgan calculated the equity value for both NYMEX Holdings and CME Group by increasing the unlevered enterprise values of each of NYMEX Holdings and CME Group by the estimated value of their respective cash, cash equivalents and marketable securities as of December 31, 2007.

Based on the assumptions set forth above, this analysis implied for NYMEX Holdings common stock a range of $83.00 to $117.00 per share, and for CME Group Class A common stock a range of $491.00 to $680.00 per share. JPMorgan noted that the implied range of exchange ratios given these ranges was 0.1227 to 0.2378. JPMorgan also noted that the merger exchange ratio was 0.2064, assuming a 100% stock transaction, based on the closing price of CME Group Class A common stock on March 14, 2008.

Relative contribution analysis: JPMorgan reviewed the relative contribution of NYMEX Holdings and CME Group to the forecasted revenue, EBITDA and net income of CME Group post-merger (excluding synergies and integration costs) for the calendar years ending December 31, 2008 and 2009. The relative contribution analysis did not take into effect the impact of any synergies as a result of the proposed merger.

The relative contribution percentages based on revenue, EBITDA and net income were used to determine the implied pro forma ownership percentages of CME Group post-merger for the common stockholders of CME Group and NYMEX Holdings. The following table presents the results of the relative contribution analysis and implied exchange ratio (assuming a 100% stock transaction):