Nasdaq/ICE offer 19% premium for NYSE over DB

March 31, 2011 07:00 PM

Nasdaq OMX Group (Nasdaq) and Intercontinental Exchange (ICE) made official the rumors that they would make a joint bid for NYSE Euronext that have circulated since the announcement that NYSE Euronext and Deutsche Börse (DB) had reached a merger agreement.

NYSE Euronext stated in a release that its board “will carefully review the proposal. NYSE Euronext urges shareholders not to take any action with respect to the proposal.”

The joint bid’s value is $42.50 in cash and stock per NYSE Euronext share, or approximately $11.3 billion. This is a 19% premium over what DB is offering.

Under the terms of the proposed acquisition, NYSE Euronext stockholders would receive $14.24 in cash, plus 0.4069 shares of NASDAQ OMX common stock and 0.1436 shares of ICE common stock for each NYSE Euronext share.

The joint proposal includes plans to break-up NYSE Euronext with the U.S. cash listings, most options and technology businesses going to Nasdaq, and the Liffe derivatives and clearing businesses going to ICE.

During an investor and media call, Nasdaq CEO Robert Greifeld and ICE Chairman and CEO Jeffrey Sprecher highlighted that the deal would provide strategic significance to all parties, would leverage each of their respective companies and that accretion could be realized in as little as 12-18 months after the deal was closed (projected Q4 2011).

Greifeld estimate a total of $740 million in synergies. He said that they plan to keep the NYSE trading floor open and that all the “synergies would come from consolidating the platforms.”

In regards to antitrust issues, Greifeld said that he has spoken with many regulators and noted, “We would not have entered into this agreement without having a degree of comfort that we have a path to closure.”

Sprecher said the derivates piece would be viewed as pro-competition in Europe, something for which the DB proposal has been criticized. “We would be creating a strong global derivatives player [but] not be creating a European monopoly.”

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About the Author

Web Editor/Assistant Editor Michael McFarlin joined Futures in 2010, after graduating summa cum laude from Trinity International University, where he majored in English/Communication. With the launch of the new web platform, Michael serves as web editor for the site and will continue to work on the magazine, where he focuses on the Markets and Trading 101 features. He also served as a member of the Wisconsin National Guard from 2007 to 2010.