Magazine article Modern Trader

Two Woo NYSE

Magazine article Modern Trader

Two Woo NYSE

Article excerpt

After Nasdaq OMX Group and Intercontinental Exchange (ICE) announced their joint bid for NYSE Euronext, NYSE responded that they would "carefully review the proposal."

Only days later, NYSE Euronext rejected the offer. Nasdaq/ICE responded saying, "NYSE Euronext's Board of Directors, without engaging in any dialogue or discussion, has summarily elected to deny its stockholders the opportunity to benefit from a clearly superior proposal to the announced transaction with Deutsche Borse [DB], a proposed transaction that is indisputably financially inferior."

The Nasdaq/ICE joint bid's value is $42.50 in cash and stock per NYSE Euronext share, or approximately $11.3 billion, a 19% premium over what DB was offering as of March 31. Under the terms of the proposed acquisition, NYSE Euronext stockholders would receive $14.24 in cash, plus 0.4069 shares of Nasdaq OMX common stock and 0.1436 shares of ICE common stock for each NYSE Euronext share.

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The joint proposal includes plans to break up NYSE Euronext with the cash listings going to Nasdaq, and the Liffe derivatives and clearing businesses going to ICE.

That break-up was highlighted in the NYSE rejection announcement. NYSE Euronext Chairman Jan-Michiel Hessels said, "Breaking up NYSE Euronext, burdening the pieces with high levels of debt, and destroying its invaluable human capital, would be a strategic mistake in terms of where the global markets are going, and is clearly not in the best interests of our shareholders."

Analysts, however, say that shareholders likely will not accept that argument in the face of a significantly higher offer.

In its analysis of the competing offers, Financial Services firm Keefe, Bruyette & Woods, Inc. (KBW) states that, although they expected NYSE to reject the Nasdaq/ICE counter offer, "Shareholders will be somewhat disappointed that a higher offer hasn't come from the DB deal and [we] believe they will likely reach out to management to reconsider the [Nasdaq/ICE] offer. …

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