CME announced yesterday before US market open that Apax Partners, private equity investment group, have entered into an agreement to acquire a 49.7% stake in limited partnership holding all of CME’s Non-Executive Chairman Ronald Lauder interest in CME for approximately USD 190m. Remaining part of 50.3% in limited partnership remains in the hands of Lauder family. Prior to the deal Lauder held 15.7% stake in CME (Apex thus controls 7.8% stake in CME). Apex can seek redemption or sale of its stake after the period of three years. Two new CME’s BoD members have been appointed as a result of the deal, which will be settled on 1 September.
Our view:
Transaction implies price of USD 60/share and 2006 EV/EBITDA of 13.4x. We see the entry of financial investor into CME as a good signal confirming our upbeat opinion about stock fair value of USD 79. We reiterate our Buy recommendation.