CBOE Holdings, Inc. (NASDAQ: CBOE) is expected to sell 11.7 million shares today in its initial public offering (IPO). The shares are being offered at $29 per share, the top of the IPO’s anticipated range of $27-$29. CBOE is the last U.S. member-owned exchange to issue stock to the public.
The IPO is expected to pull in $339.3 million, of which about $278 million from 9.6 million shares of unrestricted common stock will go to CBOE. The remainder represents about 2.1 million shares of unrestricted common stock that are being sold by existing shareholders. None of the proceeds from existing shareholders’ sales will go to CBOE.
CBOE has granted the underwriters, led by Goldman Sachs Group, Inc. (NYSE: GS), a 30-day overallotment option of 1.755 million unrestricted common shares.
The path to this IPO has been anything but smooth as members of the CBOE had to agree on a demutualization plan before the public offering could be made. It took about three years to clear all that up. To get buy-in from seat-holders, CBOE agreed to use some of the IPO’s proceeds to repurchase shares from members and from others who were covered in a settlement agreement.
CBOE may be a bit late to the party that has seen most of the major exchanges issue stock. The Chicago Board of Trade and the New York Mercantile Exchange issued shares two years ago, and are now owned by CME Group Inc. (NASDAQ: CME).
There is some speculation that CBOE will follow these exchanges down the acquisition path. Based on the IPO price, CBOE is valued at about $3 billion. Potential buyers include CME Group and Intercontinental Exchange Inc. (NYSE: ICE).
CBOE trades about 95% of all index options, and controls about a quarter of the U.S. stock options market. In addition to the Dow Jones Industrials and the S&P 500, CBOE also links to the CBOE Volatility Index (VIX), which has become a closely watched indicator of trader fear.
Today’s IPO is one of those “better-late-than-never” deals. It should still reap nice rewards.
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