CME keeps shareholder meeting Monday as planned; UnionBanCal rejects Bank of Tokyo-Mitsubishi offer

By Aaron Hochman-Zimmerman

New York, Aug. 14 - CME Group Inc. told Nymex Holdings Inc. shareholders that the current offer is fair and it sees no reason to move Monday's meeting for holders to vote on the deal between the two exchanges.

Nymex shareholders had been building support for a postponement, but now those opposed to the current arrangement will be given no extra time to make changes.

Also in the financial sector, one of California's survivors of the banking crisis, UnionBanCal Corp., told Mizuho Financial Group Inc.'s Bank of Tokyo-Mitsubishi that its offer is not enough for the 65% it does not already own.

The Bank of Tokyo-Mitsubishi said it would continue to pursue a target whether it is UnionBanCal or not.

Elsewhere, buzz about a merger cooking between Campbell Soup Co. and HJ Heinz Co. will likely be put back in the pantry, sources said.

Also, Israel's Gilat Satellite Networks Ltd. thought it was ready to sign all the paperwork necessary for it to be taken private, but the private equity team in question said the deal was not yet seaworthy.

Neither side offered details about the nature of the difficulties.

Meanwhile, the Dow Jones Industrial Average bounced back from a morning dragged lower by inflation data to end higher by 82.97, or 0.72%, at 11,615.93, while the Nasdaq Composite Index added 25.05, or 1.03%, to finish at 2,453.67.

The S&P 500 was up 7.10, or 0.55%, to close at 1,292.93.

The show must go on, CME says

Nymex shareholders campaigned for a postponement of Monday's meeting to approve the 0.1323 plus $36 per share deal to be acquired by CME Group.

The disgruntled shareholders hoped that CME would take a few days to rework the tax implications of the deal in order to have the $750,000 per seat payment be treated as capital gains rather than ordinary income.

CME released a statement saying that its offer is fair and that the meeting will go ahead as scheduled.

"I don't think that would've been bad if they had postponed it," an equity analyst said.

Still, the opposition to the deal within Nymex was not universal.

"A buddy of mine knows several seatholders," the analyst said, "and the ones he knows are going to vote for it."

However, the real bellwether will be major Nymex shareholder Mark Fisher, the analyst said.

"He is the Nymex ... and you've got to think that if he's made up his mind, people are going to follow him," he said.

Shares of Nymex (NYSE: NMX) tacked on $2.01, or 2.62%, to finish the day at $78.68.

Shares of CME (NYSE: CME) also took on $5.44, or 1.61%, to end trading at $343.92.

UnionBanCal rejects offer

Shares of UnionBanCal inched up after its special committee to review the $63 per share offer from Bank of Tokyo-Mitsubishi turned down the Japanese bank.

Bank of Tokyo-Mitsubishi already owns 35% of UnionBanCal and says it is still interested in completing its control, but it also announced that is looking for opportunities wherever they may be.

"I shouted at accounts [Wednesday] to sell it, short it," a trader said.

An analyst did not object to the idea of selling, but "I wouldn't short it," he said.

Shares of Bank of Tokyo-Mitsubishi (NYSE: MFG) shed $0.07, or 0.83%, to $8.41.

Shares of UnionBanCal (NYSE: UB) improved by $0.46, or 0.71%, to $65.46.

Passing on condiments

Much was made of the "nice fit" comment regarding Campbell's which was uttered at an annual meeting by HJ Heinz's chief executive officer William Johnson.

Still, the kind words for Campbell's may have been more garnish than dinner.

"It's not really a rumor," said Sturdivant & Co. analyst Beth Loewy.

At the meeting a shareholder asked Johnson if he thought an acquisition of Campbell's would be interesting.

Johnson answered with respect for Campbell's, but "they're pretty independent companies," Loewy said, although there would be a lot of synergies between the two.

"They both have the same product base, they both use a lot of tomatoes ... and they're in the canning business," she said.

Knowing the two companies, she said, there's likely nothing going on.

"Campbell's is pretty happy doing what they're doing," she said, referring to its rapid expansion into the emerging markets of Russia and China, which are two of the largest soup-eating populations in the world.

Heinz has been making other small acquisitions in other countries, she said, mostly sticking to the condiment business.

So "never say never," she added.

Shares of Campbell (NYSE: CPB) heated up just $0.10, or 0.26%, to $37.89.

Shares of Heinz (NYSE: HNZ) improved $0.05, or 0.10%, to $51.75.

Longs stays tight

"What shocked me yesterday was Longs," an equity analyst said about Longs Drug Stores Corp.

The $71.50 per share tender offer from CVS Caremark Corp. represents a 32% premium, "but if you back up a couple of months it's an 80% premium," he said.

"I was surprised it traded so tightly yesterday ... and didn't really recover today," he said.

Shares of Longs Drug Stores (NYSE: LDG) added $0.85, or 1.20%, to end at $71.55.

Shares of CVS Caremark (NYSE: CVS) were better by $0.06, or 0.16%, to finish at $38.09.

The deal is expected to close in the fourth quarter.

Gilat buyers stand fast

Gilat Satellite Networks announced that it has checked all the boxes ahead of its planned $475 million buyout by a private equity team led by Gores Group LLC and Mivtach Shamir Holdings Ltd., according to a press release.

However, the private equity buyers were not convinced.

"The parties are engaged in ongoing discussions on this issue in an effort to complete the transaction in the timeframe contemplated by the merger agreement," according to a Gilat release.

Shares of Gilat Satellite (Nasdaq: GILT) were lower by just $0.03, or 0.33%, to $9.09.

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