Chicago Mercantile Exchange Holdings Inc. said Tuesday it agreed to purchase CBOT Holdings Inc. (CBOT) for $8 billion in a move to create a global derivatives exchange with average daily trading volume approaching 9 million contracts per day.

The combined company will be named CME Group Inc. (CME), and will be headquartered in Chicago.

CBOT stockholders will have the right to receive 0.3006 shares of CME common stock for each CBOT share, or cash equal to the value of the exchange ratio based on a 10-day average of closing prices of CME common stock at the time of the merger.

The cash portion of the purchase price won't exceed $3 billion. If no shareholders elect to receive cash, shareholders of CME will own 69 percent of the merged company and CBOT holders will own 31 percent, with CME issuing about 15.9 million shares valued at about $8 billion.

Based on Monday's closing stock prices of both companies, the merged company is valued at $25 billion. The merger is expected to add to earnings in 12 to 18 months after closing, and deliver pretax cost savings of more than $125 million beginning in the second full year after completion.

CME Chairman Terrence A. Duffy will become chairman of the combined organization, and CBOT Chairman Charles P. Carey will become vice-chairman. CME CEO Craig S. Donohue will serve as CEO of the new company with CBOT CEO Bernard W. Dan remaining in his current position to oversee CBOT's activities, products and customers until the transaction is complete, at which time he will serve as special adviser to the combined company for one year.

The transaction is expected to close by mid-year 2007, pending approvals by regulators and shareholders of both companies and CBOT members.