Nasdaq, ICE - bid for NYSE

Saturday April 30, 2011

Nasdaq, ICE may go hostile in bid for NYSE

NEW YORK: Nasdaq OMX and IntercontinentalExchange (ICE) are poised to go hostile in their bid for NYSE Euronext after shareholders ratcheted up pressure on the Big Board parent to get a better deal.

Nasdaq OMX Group Inc and ICE were expected to soon take their US$11.1bil bid directly to NYSE's shareholders through a tender offer, two sources familiar with the situation said.

The move is seen as the next logical step for Nasdaq and ICE after being rebuffed twice by NYSE, which has refused to open talks on their offer. NYSE favours its existing US$10.1bil deal with Germany's Deutsche Boerse AG.

Nasdaq OMX Group’s offices in New York — EPA

A direct appeal to shareholders through a tender offer would ramp up the pressure that NYSE is already under, although they also have defences to keep Nasdaq and ICE at bay.

NYSE, for instance, can institute a poison pill, which would thwart the hostile bid by making it more difficult and expensive for the rivals to buy its shares.

In signs the Big Board is facing growing dissent over its strategy of just saying “no”, shareholders at its annual meeting on Thursday approved two proposals that the board had advised against, and directors who were up for election got fewer votes than before.

Investors at the packed meeting in New York urged NYSE management and board to start talks with Nasdaq and ICE, while also asking them to press Deutsche Boerse to sweeten its deal.

“This merger is grossly unfair to the shareholders,” said Kenneth Steiner, who owns about 1,000 NYSE Euronext shares. “I voted against the directors. I believe they should be removed and replaced with those who can get us the appropriate value for our shares.”

The NYSE board and managers who launched a charm offensive to woo shareholders stuck to their belief that the Deutsche Boerse deal was the better way to go.

Earlier on Thursday, NYSE CEO Duncan Niederauer said he would close the “perceived value gap” between the deals. The Nasdaq/ICE offer is about 10% higher than the Deutsche Boerse deal.

Niederauer, a fierce rival of Nasdaq's Robert Greifeld, promised that a combined NYSE-Deutsche Boerse would have much higher earnings, diverse revenues and would cut costs.

With shareholders pushing for a sweeter deal from the German exchange, Niederauer said, “We would hate to miss out on an accelerating opportunity because we just got a touch too greedy on the ratio.” - Reuters

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