CME Group today announced a US$1.1 billion share buyback and plans to pay a special dividend of approximately US$350 million.
The firm said that its board of directors has authorized new initiatives to return capital to shareholders while continuing to aggressively execute its global growth strategy. The initiatives include a share buyback program of up to US$1.1 billion of CME Group class A common stock, subject to market conditions. The buyback program will take place over a period of up to 18 months. The board’s authorization permits the repurchase of shares through the open market, an accelerated program, a tender offer or privately negotiated transactions.
In addition, CME Group intends to declare a special dividend of US$5.00 per common share, following the resolution of the company’s pending NYMEX transaction.
“The board’s authorization to institute a share buyback program represents an efficient use of our capital and demonstrates continued confidence in CME Group’s strategy and growth potential,” said CME Group executive chairman Terry Duffy, in a release. “We recognize that our successful merger with the Chicago Board of Trade and our continued growth and success will result in significant free cash flow generation that will exceed what we need to have on hand in order to continue our aggressive global growth strategy. The combination of a flexible share buyback program and a special dividend addresses the different interests and preferences of our diverse shareholder base.”
“With the completion of the merger with CBOT and the pending acquisition of NYMEX, our need to significantly build cash balances has changed,” said CME Group CEO Craig Donohue. “Today’s initiatives positively address the interests of our shareholders, while allowing us to successfully complete our pending acquisition of NYMEX in a highly disciplined fashion. CME Group will continue to take advantage of the many growth opportunities we are pursuing globally through product innovation, increased distribution, over- the-counter initiatives, and additional strategic partnerships such as our agreement with BM&F Bovespa.”
“We believe our new capital structure initiatives reflect the high operating efficiency and relatively low capital requirements inherent in our business model,” said CME Group CFO Jamie Parisi. “We will incur up to US$4 billion of debt initially to execute both the NYMEX transaction and this return of capital. We are balancing the shareholder benefits of incurring some debt with the critical role CME Group plays in global capital markets and we are, therefore, targeting a very strong investment grade credit rating.”