New York: Nasdaq OMX and IntercontinentalExchange (ICE) unveiled a rival bid to buy NYSE Euronext for about $11.3 billion in cash and stock, a 19% premium to the offer made by German competitor Deutsche Boerse.
The move, announced on Friday, could raise new antitrust questions as it would combine the two largest US stock exchanges. Already, the Deutsche Boerse bid was seen as likely to attract intense regulatory scrutiny as the merged company would have a lock on European exchange-traded derivatives.
Deutsche Boerse’s bid had also stirred political backlash from some lawmakers who opposed the idea of a foreign company taking over an emblematic Wall Street brand.
The new offer is valued at $42.50 per share, Nasdaq and ICE said. The offer represents a 19% premium to NYSE’s closing price on Thursday and is 27% above the company’s valuation before Deutsche Boerse’s $10.2 billion bid in February.
Under the proposal, ICE would purchase NYSE’s valuable derivatives business while Nasdaq would acquire its stock exchanges and options businesses.
“It’s quite a bold move from Nasdaq and ICE. Certainly I think the premium they’re paying is quite high ,” said Karl Morris, an analyst at Keefe Bruyette & Woods in London. “It makes you wonder what Deutsche Boerse is going to do about this and I struggle to see how they can lift their bid to match.”
NYSE shares jumped about 10.5% at $38.63 in premarket trading, while Deutsche Boerse shares were down 0.2% in Frankfurt.
Nasdaq shares fell 0.9% to $25.60 and ICE shares slipped 1.4% to $121.80 in premarket trade.
For now, Deutsche Boerse is studying the offer and relying on Nasdaq shareholders and US regulators to scrutinize the deal before deciding its next move, a person familiar with Deutsche Boerse’s thinking said on Friday.
NYSE Euronext said its board would “carefully review” the new offer and urged shareholders not to take any action pending its review.
The counterbid comes amid an expected wave of tie-ups in the increasingly competitive and global exchange business, where companies are linking up and pushing into derivatives to survive and grow.
Bringing Nasdaq and the New York Stock Exchange together would create a stock-trading powerhouse in the United States and Europe that would also dominate the business of listing public companies, and dwarf other US options markets.
If successful, a counter-offer could redraw the global exchange map and be a bold move by Nasdaq chief executive Robert Greifeld, who has a mixed deal-making record.
ICE, an Atlanta-based futures specialist, would get London’s profitable LIFFE platform, giving CEO Jeffrey Sprecher an interest-rate business that eluded him when its bid for the Chicago Board of Trade failed four years ago.
But with other exchange deals driven largely by a need to diversify and ramp up profitable derivatives trading, a Nasdaq deal with the NYSE would only expand in the core, low-margin, stock-trading business -- and could raise questions for shareholders.
In a flurry in February 2011, Deutsche Boerse agreed to buy NYSE, the London Stock Exchange Group Plc announced a deal to take over Canadian market operator TMX Group Inc and BATS Global Markets said it will buy peer Chi-X Europe.
When Deutsche Boerse unveiled its bid for NYSE Euronext, chief executive Reto Francioni acknowledged that “we have a bumpy road ahead of us.” Beyond antitrust issues, there have been questions about what the merged company would be called, as the New York Stock Exchange is seen as occupying an iconic role in American business.
Under the counter-bid, NYSE shareholders would receive $14.24 in cash plus 0.4069 of a share of Nasdaq stock.
Under the Deutsche Boerse proposal, which still awaits approval by shareholders and regulators, each share of NYSE Euronext stock would be exchanged for 0.47 share of the combined company’s stock.
Nasdaq and ICE said that within 12 to 18 months, the combined franchise would provide “double-digit accretion” to shareholders and save $740 million in operating costs per year.
The deal outlined by Deutsche Boerse would deliver $5.4 billion in total combined revenue and $400 million cost savings and immediately add to adjusted earnings for shareholders, according to those companies.
Nasdaq and ICE have engaged a group of banks, including Bank of America and Wells Fargo, to provide $3.8 billion worth of financing to support the proposed deal.