April 23, 2024

DealBook: Nasdaq and ICE Make Bid for NYSE Euronext


Nasdaq OMX and IntercontinentalExchange on Friday made a hostile play for NYSE Euronext, offering $42.50 in cash and stock — in a deal that is valued at $11.3 billion.

The joint proposal by the two exchanges bests an offer from Deutsche Börse by 19 percent and represents a 27 percent premium to the NYSE’s stock price before the Deutsche Börse deal was announced in early February.

Under the terms of the transaction, ICE would carve out NYSE’s derivatives unit and Nadasq would take the remaining businesses, including stock trading and options in the United States. For each share they own, NYSE investors would get $14.24 in cash, plus 0.4069 shares of NASDAQ stock and 0.1436 shares of ICE stock.

“Our industry is undergoing a period of historic change,” Robert Greifeld, chief executive of Nasdaq, said in a statement. “The combination of the two leading U.S. exchanges delivers an opportunity to build a global exchange platform that has the scale and growth potential to benefit investors, issuers and other market participants. We believe it would increase transparency and liquidity in U.S. markets and create jobs as new companies raise capital.”

The board of the NYSE Euronext has said it will review the proposal by Nasdaq and ICE.

American exchanges have been losing ground to international competitors in recent years. In 2010, the United States accounted for only 16 percent of the capital raised around the world, according to the ICE. And domestic exchanges only landed one of the 10 largest initial public offerings, the one for General Motors.

The transaction would help Nasdaq compete more effectively in a changing global market, one that is increasingly dependent on size and scale. With the addition of the NYSE’s cash equities business, Nasdaq would rank among the world’s largest players in stock trading.

But the deal faces significant obstacles. While the bar is already high for hostile takeovers, Nasdaq and NYSE have long been rivals — and its unclear how the two could work together. Nor has Deutsche Börse made clear how it will respond to the counteroffer.

Any transaction could also take its toll on Nasdaq’s finances. The company has nearly $2.2 billion in long-term debt.

Nasdaq and Ice would finance the deal through existing cash on the books and $3.8 billion in financing. The companies said they had received commitments from several firms, including Bank of America and Wells Fargo.

Bank of America Merrill Lynch and Evercore Group are advising Nasdaq on the deal, with Shearman Sterling providing legal counsel for this transaction. Lazard, Broadhaven Capital Partners and BMO Capital Markets are working with ICE while Sullivan Cromwell is representing the company from a legal perspective.

Article source: http://dealbook.nytimes.com/2011/04/01/nasdaq-ice-make-hostile-bid-for-nyse-euronext/?partner=rss&emc=rss

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