November 29, 2023

DealBook: Nasdaq and ICE Drop Offer for NYSE Euronext

The Nasdaq OMX Group and IntercontinentalExchange announced on Monday they were withdrawing their bid for NYSE Euronext, after antitrust regulators said the deal would not gain the necessary approvals.

“We took the decision to withdraw our offer when it became clear that we would not be successful in securing regulatory approval for our proposal despite offering a variety of substantial remedies,” the Nasdaq chief executive, Robert Greifeld, said in a statement.

Nasdaq and ICE spent weeks on an unsolicited takeover effort that got heated at times.

In April, Nasdaq and ICE made an $11.3 billion takeover offer for the owner of the Big Board, topping a $10 billion friendly merger agreement with Deutsche Börse arranged in February.

But NYSE Euronext remained committed to its deal with the owner of the Frankfurt exchange, twice rejecting the rival bidders. The NYSE said that it worried a deal with the United States exchange operators would not clear regulatory hurdles and that it would necessitate unreasonable amounts of debt.

“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,” the NYSE Euronext chairman, Jan-Michiel Hessels, said in a statement in April. “The highly conditional break-up proposal from Nasdaq/ICE would also require shareholders to shoulder unacceptable execution risk.”

Even so, Nasdaq and ICE pushed forward. Earlier this month, they vowed to take the offer directly to NYSE shareholders. On May 9, the two exchange operators issued a letter to NYSE investors, saying the board had failed to provide all of the facts to make an “informed decision” about the deal with Deutsche Börse.

“NYSE Euronext’s actions reflect corporate governance at its worst and falls far short of the governance standards they recommend for listed companies,” Nasdaq and ICE wrote.

Now, after discussions with the Justice Department’s antitrust division, the companies are pulling their offer for NYSE. Nasdaq and ICE said they had tried to assuage regulators’ concerns, in part by offering to sell off certain businesses, but it was not enough.

“We have said from the beginning that NYSE Euronext shareholders should not be forced to vote on their combination with Deutsche Börse while antitrust concerns continued to exist in both the U.S. and the E.U.,” Mr. Greifeld said in a statement. “While we are surprised and disappointed in the Antitrust Division’s conclusion, some of the uncertainty, at least as it relates to our joint proposal, has been resolved.”

Nasdaq and ICE have a mixed deal-making record. Nasdaq tried and failed to buy the London Stock Exchange, while ICE lost out to the CME Group in a battle to acquire the Chicago Board of Trade.

On Monday, shares of Nasdaq were down 2.27 percent in premarket trading.

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