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Why Shares of Cboe Global Markets Soared -- Then Gave It All Back -- on Wednesday

By James Brumley – Aug 18, 2021 at 4:17PM

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A financial news outlet published a story that neither involved party is willing to confirm, and one of which is outright denying.

What happened

At its peak price on Wednesday, Cboe Global Markets (CBOE -0.02%) stock was up more than 9% in response to whispers it was to be acquired by fellow exchange CME Group (CME 0.79%). Shares were back near break-even levels for the day, however, after CME Group denied the rumor.

So what

Financial Times broke the now-denied story, suggesting CME was preparing an all-stock buyout offer that would have valued Cboe Global Markets at $16 billion. An official statement from CME Group, however, explains: "CME Group denies all rumors that it is in conversations to acquire Cboe Global Markets. The company has not had any discussions with Cboe whatsoever." The statement goes on to say, "While the company does not typically comment on rumor or speculation, today's inaccurate information required correction."

A dollar-based bar chart that's rising, and then starts to fall.

Image source: Getty Images.

Cboe Global Markets has not directly responded to the allegation, only commenting that as a matter of policy it doesn't comment on such speculation or rumors.

Now what

In some instances, rumors end up becoming reality -- particularly rumors regarding acquisitions. Such deals generally require days if not weeks of negotiations before either party is ready to make an agreement. These discussions are difficult to keep secret.

In this particular case, though, the rumor (even by rumors' low standards) lacks any real credibility. The prospect of combining these two exchanges hasn't even been suggested before today, and there's no clear advantage to either company melding their operation with the other.

That's not to say it can't or won't happen. But in the wake of CBOE stock's 56% run-up just since July's low, the prospect of a buyout isn't a basis for a trade that even most speculators can get behind.

James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Cboe Global Markets Inc. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.

Stocks Mentioned

Cboe Global Markets Inc Stock Quote
Cboe Global Markets Inc
CBOE
$126.82 (-0.02%) $0.02
CME Group Stock Quote
CME Group
CME
$177.90 (0.79%) $1.40

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