The board of NYSE Euronext rejected an unsolicited $11 billion joint bid by Nasdaq OMX Group Inc. and the IntercontinentalExchange Inc., calling it "strategically unattractive" and entailing "unacceptable execution risk," the New York Stock Exchange's parent said Sunday.
NYSE board members, who met Sunday, are skeptical of the Nasdaq plan even though the smaller exchange operator's bid is worth about $1.6 billion more than the deal NYSE agreed to with Germany's Deutsche Börse last month. The main concern is that Nadsaq's deal will be derailed in Washington, either by antitrust authorities worried about putting the two U.S. strongest exchanges together or by politicians from the New York area worried about a loss of jobs.
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Bloomberg News
The New York Stock Exchange in New York.
NYSE Euronext also reaffirmed its commitment to the Deusche Börse offer, saying it will provide "compelling value for our shareholders" by creating the world's "premier" global exchange.
"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," NYSE Euronext Chairman Jan-Michiel Hessels said. "The highly conditional break-up proposal from Nasdaq/ICE would also require shareholders to shoulder unacceptable execution risk."
But there are risks to rejecting Nasdaq's plan hastily. Some shareholders of NYSE are likely to protest such a move, hoping to extract a higher offer for their shares.
Nasdaq Chief Executive Officer Robert Greifeld has been meeting with shareholders of NYSE Euronext in recent days, as well as European and American politicians, to build support for his proposal. Under the plan, NYSE's stock-trading businesses would go to Nasdaq. NYSE's derivatives business, based in London, would be bought by ICE.
Analysts say that the Nasdaq-ICE deal, with cost savings slated at over $700 million, would lead to the loss of more jobs than the Deutsche proposal.
The cuts may start at the top. NYSE CEO Duncan Niederauer is a fierce rival of Mr. Greifeld and few exchange watchers believe the two would work together. By contrast, Mr. Niederauer is slated to become the CEO of the combined NYSE-Deutsche Börse. The Frankfurt exchange operator, whose shareholders will own 60% of the new company, will send its CEO, Reto Francioni, to become the new company's chairman.
Write to Gina Chon at gina.chon@wsj.com and Aaron Lucchetti at aaron.lucchetti@wsj.com
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