CME, GFI Announce Increased Offer For GFI Stockholders - Quick Facts

(RTTNews) - Futures exchange operator CME Group Inc (CME) and GFI Group Inc (GFIG) Tuesday announced that they have revised their definitive agreements to increase the consideration payable to GFI Group stockholders from $4.55 per share in CME Group stock to $5.25 per share, payable in a mix of shares of CME Group Class A common stock and cash.

This new offer price represents a 5% premium above yesterday's closing price of $5.00 per share of GFI Group common stock and a 69% premium above the closing price of $3.11 per share of GFI Group common stock on July 29, the last day of trading prior to the announcement of the transaction.

As part of the revised transaction, the purchase price to be paid by a private consortium of GFI Group management, led by current Executive Chairman Michael Gooch, CEO Colin Heffron and Managing Director Nick Brown, for GFI Group's wholesale brokerage business increased to $254 million, up from $165 million in cash offered in July, along with the assumption, at closing, of approximately $72 million of unvested deferred compensation and other liabilities.

This $89 million increase represents $0.70 per share and is being passed along in its entirety by CME Group to GFI Group stockholders, increasing the total consideration payable to GFI Group stockholders from $4.55 per share to $5.25 per share.

CME Group will retain Trayport, a provider of trading software in the European energy markets, and FENICS, a firm which provides best-in-class price discovery, analytics, risk management and workflow connectivity services for the global OTC FX options markets.

In addition, the continuing GFI Group brokerage business will maintain its commitment to both Trayport and FENICS by entering into long-term commercial agreements, including a data license agreement with a minimum revenue guarantee of $15 million for the sales of FENICS data products under certain circumstances.

CME Group's total consideration of approximately 655 million for Trayport and FENICS, including assumption of approximately $240 million of GFI Group debt, remains unchanged under the revised transaction terms.

The transaction remains subject to the approval of the stockholders of GFI Group as well as customary regulatory review and approvals. It is expected that the transaction will close in early 2015.

The transaction will be effected through a merger of GFI Group and a subsidiary of CME Group and a concurrent acquisition of the wholesale brokerage business by the GFI Group Management Consortium for $254 million and the assumption, at closing, of approximately $72 million of unvested deferred compensation and other liabilities.

In the merger, GFI Group stockholders are entitled to elect to receive, for each share of GFI Group common stock they own, either cash consideration of $5.25 per share or a number of shares of CME Group Class A common stock based on an exchange ratio the numerator of which is the offer price of $5.25 per share of GFI Group common stock and the denominator of which will be the 10-day average closing price of CME Group common stock prior to the closing date of the transaction.

All elections are subject to proration as provided in the revised merger agreement to account for the maximum available cash consideration of $89 million, which is approximately 13% of the total consideration.

If the cash elections exceed this amount, CME Group may elect to further increase the available cash consideration to limit the proration effect. GFI Group stockholders who do not make a timely election will receive all cash consideration, subject to proration as described above.

GFI Group's Board, acting upon the unanimous recommendation of a Special Committee of the Board comprised solely of independent and disinterested directors, approved the revised merger agreement and continues to recommend that GFI Group's stockholders vote to approve the merger agreement.

The remaining terms of the transaction have remained the same in all material respects

In addition to the stockholder approval required by GFI Group's organizational documents and applicable law, the agreements continue to provide that the merger agreement must be approved by the affirmative vote of holders of a majority of GFI Group common shares that are not held by Jersey Partners Inc. and its equity holders, the officers and directors of GFI Group, and the members of the GFI Group Management Consortium and their affiliates (other than GFI Group).

Jersey Partners Inc., GFI Group's largest stockholder, and the members of the GFI Group Management Consortium and their respective affiliates (other than GFI Group) continue to agree to vote all of their GFI Group shares in favor of the transaction at the GFI Group stockholder meeting to approve the transaction.

GFI Group anticipates holding a Special Meeting of stockholders in January 2015 to vote on this matter.