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Consolidation in the exchanges is rampant

Consolidation in the exchanges is rampant. It is possible that NMX will merge with another exchange; for instance, rumors of an NMX-NYSE merger have been quashed many times in recent years.

Currently, NMX is the subject of a merger bid from the Chicago Mercantile Exchange (CME) which values NMX at around $85 per share. The exact conversion ratio for each share of NMX is 0.1323 shares of CME and $36 cash.

Both groups are enjoying significant growth in their core trading activities - with activity in the agricultural, energy and commodity pits showing record levels of transactions volumes and prices. However, in the last 90 days, there have been reductions to the overall profit estimates of both groups, with CME's full year 2008 profits now estimated to be $17.91 per share, down from a recent level of $19.44. Most of those revisions have come within the last 30 days, actually. CME's 2009's EPS estimates are also being reduced by a similar sized $2 per share, to a level of $22.36 for next year.

The NMX balance sheet is very tight, with over $557 million in cash on the books, or about $6 per share, offset by only $80 million in long-term debt.