Filed by Chicago Mercantile Exchange Holdings, Inc. pursuant
to Rule 425 under the Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934, as amended.
Subject Company: CBOT Holdings, Inc.
Subject Company’s Commission File No.: 001-32650
 CBOT/CME: A
Superior Combination for Shareholders, Members and Customers CBOT Member/Shareholder Meeting March 22, 2007
|
 2 Discussion of Forward-Looking Statements Forward-Looking Statements This presentation may contain forward-looking information regarding Chicago Mercantile
Exchange Holdings Inc. and CBOT Holdings, Inc. and the combined
company after the completion of the merger that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the benefits of the business combination transaction involving CME and CBOT, including future financial and operating results, the new company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based on current beliefs,
expectations, forecasts and assumptions of CME and CBOT’s management which are subject to risks and uncertainties which could cause actual outcomes and results to differ materially from these statements. Other risks and uncertainties relating to the proposed transaction include, but are not limited
to the satisfaction of conditions to closing; including receipt of shareholder, member, antitrust, regulatory and other approvals on the proposed terms; the
proposed transaction may not be consummated on the proposed terms; uncertainty
of the expected financial performance of CME following completion of the proposed transaction; CME may not be able to achieve the expected cost savings, synergies and other strategic benefits as a result of the proposed transaction; the integration of CBOT with CME’s operations may not be successful or may be materially delayed or may be more costly or difficult than expected; general industry
and market conditions; general domestic and international economic conditions;
and governmental laws and regulations affecting domestic and foreign
operations. For more information regarding other related risks, see Item 1A of CME’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Copies of said 10-K is available online at http://www.sec.gov or on request from the CME. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Except for any obligation to disclose material information under the Federal securities laws, CME
undertakes no obligation to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date of this presentation. Additional Information CME and CBOT have filed a definitive joint proxy statement/prospectus with the Securities
and Exchange Commission (SEC) in connection with the proposed transaction.
This material is not a substitute for the definitive joint proxy statement/prospectus or any other documents CME and CBOT have filed or will file with the SEC. Investors and security holders are urged to read the definitive
joint proxy statement/prospectus and any other relevant documents filed or to be filed by CME or CBOT because they contain or will contain important information about the proposed transaction. The definitive joint proxy statement/prospectus is, and other documents filed or to be filed by CME and CBOT with the
SEC are or will be, available free of charge at the SEC’s Web site (www.sec.gov) or from Chicago Mercantile Exchange Holdings Inc., Shareholder
Relations and Membership Services, 20 South Wacker Drive, Chicago, Illinois 60606, Attention: Beth Hausoul. ------------------
---- CME and its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about CME’s directors and executive officers is available in the definitive joint proxy statement/prospectus. ------------------
----- Statements included in this presentation relating to the ICE offer reflect the views of CME’s management. ------------------
---- This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as
amended. |
 Terry Duffy
Executive Chairman, CME |
 4 A Shared History…and Vision for the
Future 1848: CBOT founded – derivatives industry is born 1865: CBOT launches first grain futures 1898: Chicago Butter and Egg Board founded 1919: CME established 1972: Financial futures invented 1977: U.S. Treasury futures launched 1981: CME Eurodollar contract launched 1987: CME, CBOT, Reuters pioneer electronic trading 1997: E-mini stock index futures launched 2002: CME becomes a public company 2003: CBOT/CME common clearing link initiated 2005: CBOT becomes a public company 2006: CME and CBOT announce merger plans Today: we are better together. |
 Strategic
Benefits of CME’s Proposal Craig S. Donohue CME Chief Executive Officer
|
 6 CBOT/CME: Better Together - Our View Strategically Financially Operationally ICE’s proposal exaggerates the estimated synergies offers CBOT shareholders a weaker currency will limit CBOT’s comparative future growth potential and value creation opportunities poses significant execution and integration risks that could adversely affect customers and shareholders |
 7 CBOT/CME DOJ Review On Track • ICE’s comments are misleading • We are well advised by anti-trust counsel and leading economists • We compete in a global market: Domestic and foreign exchanges Securities, options and futures exchanges Cash and OTC derivatives markets We remain confident that our
merger will close mid-year 2007 |
 8 CBOT/CBOE Exercise Right • ICE has proposed same exact structure • ICE has not offered a specific alternative • ICE has not offered CBOT shareholders a guarantee • CBOE has not consented to ICE’s proposal • CME will consider an alternative structure if CBOE confirms preservation of the exercise right ICE’s proposed
structure/transaction is not a differentiating factor |
 9 Better Together – Our View Operationally Strategically Financially Operationally |
 10 CBOT/CME is Financially Compelling • CME and CBOT are 1 st and 3 rd largest exchanges ICE is 10th • CBOT and CME are the most well diversified exchanges in the world - by volume and revenue • ICE has a narrow energy product set • CME offers stronger currency • CME will deliver on synergies |
 11 CME Q406 ADV Interest Rates 56% Equity Mini 30% Equity Standard 3% FX 10% Commodities & Alt Investments 1% ICE/NYBOT Q406 ADV Energy 87% Soft Commodities 13% CME Q406 Clearing & Transaction Revenue Interest Rates 44% Equity Standard 6% Equity Mini 32% FX 16% Commodities & Alt Investments 2% ICE/NYBOT Q406 Clearing & Transaction Revenue Energy 84% Soft Commodities 16% Sources: Company press releases and SEC filings ICE volume and revenue are limited to the energy and soft commodity markets Diversity of ADV and Revenue |
 12 Foreign Exchange 10% Eurodollars 29% Equities 27% Commodity & Other 8% 30-Year Bonds 5% 10-Year Notes 12% 5-Year Notes 5% 2-Year Notes 2% Other Interest Rates 2% Equities 39% Eurodollars 44% Commodities & Other 2% Foreign Exchange 15% CBOT/CME Product/Revenue Diversity Strong and broad platform with a diversified product mix NOTE: Data as of 1H06. Commodities & Other 20% 10-Year Notes 37% 30-Year Bonds 13% Other Interest Rates 6% 2-Year Notes 4% 5-Year Notes 15% Equities 5% CME Standalone Transaction Revenue Mix CBOT Standalone Transaction Revenue Mix Pro Forma Transaction Revenue Mix |
 13 Sources: Company press releases and SEC filings We Operate in a Global Marketplace 0 1,000 2,000 3,000 4,000 5,000 6,000 5,313 3,269 4,628 2,043 897 604 Note: Individual equity options excluded CME is the largest global derivatives exchange and has a strong partnership with the leading energy exchange, while ICE/NYBOT is not the largest in any segment Q406 Average Daily Volume By Exchange (contracts in thousands) CME CBOT Eurex ENXT NYMEX ICE/ NYBOT Interest rates Equities Foreign exchange Commodities Energy Metals |
 14 Monthly Average Daily Volume Total ICE Futures & NYBOT (contracts in thousands) CME FX Volume Equals ICE/NYBOT Total Volume, and Shows Faster Growth 0 200 400 600 800 JUL 06 SEP 06 NOV 06 JAN 07 MAR 07 529 700 0 200 400 600 800 373 721 Monthly CME FX ADV vs. NYBOT FX ADV (contracts in thousands) CME offers extremely liquid FX markets – FX is CME’s third largest product and is currently averaging the same amount of volume as all ICE futures and all NYBOT combined JUL 06 SEP 06 NOV 06 JAN 07 MAR 07 14 CME FX NYBOT FX Source: CME data, ICE and NYBOT websites |
 15 WTI Average Daily Volume NYMEX on CME Globex vs. ICE CME Successfully Integrates NYMEX, and Takes Market Share Back from ICE (by month; notionally adjusted; contracts in thousands) 0 100 200 300 400 JUN 06 JUL 06 AUG 06 SEP 06 OCT 06 NOV 06 DEC 06 JAN 07 360 38 185 116 NYMEX WTI on CME Globex ICE WTI The Electronic Trading Comparison FEB 07 MAR 07 To date Source: Derived from NYMEX web site and CME data |
 16 In a challenging market, ICE’s unseasoned stock declined 20% • ICE’s volatility is 30% higher than CME’s • Since ICE’s IPO, ICE’s P/E has fluctuated more than 26 points vs. CME’s fluctuation of 10 points over the same time period • ICE has a limited track record as a public company ICE has been public for only 1.5 years (CME has been public for over 4 years) CME has a history of exceeding earnings expectations ___________________________ 1. February 21, 2007 represents ICE’s all time high share price. 2. Exchange index includes TSX, OMX, ASX, Hong Kong Exchange, Singapore Exchange, Deutsche Boerse,
Euronext, Bursa Malaysia, LSE, Bolsas y Mercados, ISE and NYSE. CBOT/CME is Financially Compelling Indexed Price Performance Quality of Currency Characteristics 2/21/2007 2/28/2007 3/7/2007 3/14/2007 70 75 80 85 90 95 100 105 Indexed Price (19.49%) ICE (9.16%) Exchange Index (0.58%) CME (4.67%) S&P 500 (1) (2) |
 17 CBOT/CME is Financially Compelling • CBOT/CME will deliver synergies as promised $125+ million in estimated annual cost savings expected to be achieved year two post closing • CBOT/CME expected to be accretive to GAAP earnings 12 – 18 months post close Cash accretive immediately v. 18 months out w/ ICE • CBOT/CME offers greater potential revenue synergies • CBOT/CME enhances operating leverage |
 18 • We believe that ICE synergies are actually in the $60 – $105M range • If ICE’s synergies are not achieved, the implied value of the ICE currency offered to CBOT shareholders would be less than the offer price CBOT/CME is Financially Compelling ICE claims exaggerated synergies of $240M |
 19 CBOT/CME is Financially Compelling • $100M operational expense synergies are questionable Limited insight as to how synergies would be achieved 43% in expense reduction excluding d&a is well outside range of precedents CME view of ICE expense synergies: $40M to $65M • $90M clearing synergies
are unrealistic No account for significant expenses to handle increased clearing volume Some of the synergies ICE is claiming could come from CBOT standalone alternatives CME view of ICE clearing synergies: $20M - $40M ICE claims exaggerated synergies of $240M |
 20 • CBOT/CME solidifies combined company’s status as the premier global exchange: Broadest product line Deepest liquidity • CBOT/CME builds on 200+ years of innovation • CBOT/CME delivers operational, cost efficiencies • CBOT/CME creates immediate scale advantages • CBOT/CME strengthens Chicago as leader in derivatives • CBOT/CME poised to capitalize on growth day one Consolidation Transaction Processing OTC CBOT/CME is Strategically Attractive Strong technology and clearing platforms Vibrant open outcry |
 21 $0 $45,000 $90,000 $135,000 $180,000 $225,000 $270,000 Interest Rates FX Credit Default Equity-linked Commodity CBOT/CME is Strategically Attractive Source: June 2006 Notional Value Outstanding per March 2007 BIS Quarterly Review $262,296 $38,111 $20,352 $6,783 $6,394 CBOT/CME better positioned to take
advantage of OTC growth opportunities Clearing 360 • FXMarketSpace FX cash clearing • Interest rates swaps clearing Alternative Markets • Trading and clearing of weather, real estate, economic indexes commonly traded in OTC markets Credit Derivatives • Trading and clearing for the $20 trillion (outstanding) OTC credit derivatives market • The $250 trillion (outstanding) interest rate swaps market • OTC Cash FX trading - $2 trillion in daily turnover |
 22 CBOT/CME: The Superior Combination Most significant opportunities for growth Best ability to execute and integrate ICE CME Broadest global distribution Most scalable technology Industry-leading clearing house Ability to deliver promised synergies Most robust product line Greatest operational efficiencies Stable and tested currency Proven record as a public company Most valuable exchange Shared sense of heritage Best smoke and mirrors |
 The CBOT/CME
Clearing Advantage Kim
Taylor President, CME Clearing |
 24 Benefits of the Common Clearing Link • Offers rock solid operational reliability • Provides high degree of risk management and financial integrity • Delivers low-cost services • Leverages scalability and adaptability |
 25 Clearing: Operational Benefits • NYBOT would need to scale up clearing capacity to accommodate CBOT volume: By 18+ times to accommodate CBOT ADV on day one By 30 times to handle peak volume • CME has supported give-up functionality for 15 years & a 2-way API for the past 5 years Both are critical to processing CBOT business • CME is experienced with managing mark-to-market flows more than 40 times NYBOT ICE lacks operational capacity to
clear business of
CBOT’s magnitude |
 26 Clearing: Risk Management & Financial Integrity • CME offers important innovation over clearing houses that offer solely net or gross margining: CBOT house portfolios are margined net by CME CBOT customer portfolios have the choice between net margining or gross margining For some portfolios, net margining is more efficient and for other portfolios, gross margining is more efficient ICE’s net margining proposal is a step backwards |
 27 Clearing: Cost & Capital Efficiencies • The combination of CME & CBOT products under a single clearing house resulted in significant capital savings & efficiency for the market Potential Margin Efficiencies Lost: $700 million-$1 billion+ Potential Guarantee Fund Requirements: $550 million NYBOT Ad’l Req: $350 million CME Savings Lost: $200 million Total potential disruption to capital efficiency: $1.3 - $1.6 billion ICE cross-margining efficiencies of $50 million
don’t compare to margin
efficiencies with CME/CBOT |
 28 Clearing: Growth Capabilities • CME Clearing already has a strong foundation to continue growing the combined business of the CME & CBOT • Clearing provides the following capabilities to support or drive growth in our combined business base: • Operational scale • Product scope • Functional richness • Deep risk management experience • OTC growth capabilities (Clearing360) • NYBOT’s focus will be on absorbing rather than growing the CBOT business Five of the top 10 CBOT volume
firms are not NYBOT clearing members |
 Leveraging
Operational Excellence for Customers Phupinder Gill Chief Operating Officer |
 30 CME/CBOT Leverages Operational Excellence • Clearing • Technology • Ready to execute |
 31 Source: CME 2006 and 2003 10Ks, CME press release dated 1/30/07, ICE 8K filed 3/13/07, ICE 2006 10K, ICE S1 filed 3/22/05, and ICE press release dated 2/7/07. To support scaling of technology infrastructure, CME has averaged $70M for past 5 years in capital reinvestment, while ICE/NYBOT combined have averaged less than $20M Technology Investment Fuels Growth 0 20 40 60 80 100 120 '02 '03 '04 '05 '06 '07 0 20 40 60 80 100 120 '02 '03 '04 '05 '06 '07 CME ICE/NYBOT ($mm) ($mm) Guidance Guidance $110-115 $88 $56 $25-30 $29 $21 Capital expenditures |
 32 CME Globex: High Volume, High Speed While orders/transactions grew by a factor of
30, the average round trip time fell 80% from its 2004 level Monthly Total Order Volume vs. Avg. RTT 0 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 200.00 Total Order Volume Avg Futures RTT Avg Options RTT MD Feed Handler |
 33 CBOT/CME is Financially Compelling • ICE operating margins are the highest of any U.S. exchange, near 70% • Existing ICE clearing costs are 9¢ per side vs. CBOT clearing charge of 6¢ per side • ICE 2006 rate per contract of $1.33 does not include recent price increase of 6¢ per contract – coincides with LCH Clearing charge decrease Rate Per Contract Trend ICE charges customers, on average, more than
twice the
CME and CBOT rate per contract $0.20 $0.50 $0.80 $1.10 $1.40 2003 2004 2005 2006 0.691 0.645 0.664 0.702 0.631 0.597 0.517 0.461 1.20 1.33 1.36 1.28 ICE CME CBOT |
 34 Customers Win with CBOT/CME • Retention of common clearing link efficiencies CBOT/CME retains more than $1 billion in margining efficiencies v. ICE/CBOT $50M • Lower costs for end users and firms At least $70M in annual savings – trading floor unification and Globex ICE transaction requires interfaces and deposits with two clearing houses rather than one, as well as interface to ICE electronic platform • Allows trading of complementary products on a single platform • Provides CBOT customers with deeper liquidity and more trading opportunities from CME Globex functionality, scalability and reliability • Greatly reduces operational and financial risk from migrating clearing Customers and clearing firms, not ICE/CBOT will bear this risk |
 35 Calling Them on the (Red) Carpet ICE claims they will see overwhelming support from the FCM community, from FIA and from Wall Street • We have to ask, why would these constituents who cheered the common clearing link: Give back more than $1 billion in margin efficiencies? Support the addition of $550 million in security deposits? Give up $70 million in recurring annual cost efficiencies? Support an exchange with 100% higher rate per trade? Customers trade more when they save more. |
 Questions &
Answers CBOT Member/Shareholder Meeting March 22,
2007 |
 37 CBOT/CME: Better Together - Our View Strategically Financially Operationally ICE’s proposal exaggerates the estimated synergies offers CBOT shareholders a weaker currency will limit CBOT’s comparative future growth potential and value creation opportunities poses significant execution and integration risks that could adversely affect customers and shareholders |
 CBOT/CME: A
Superior Combination for Shareholders, Members and Customers CBOT Member/Shareholder Meeting March 22, 2007
|