Nasdaq OMX takes case to NYSE shareholders

NEW YORK and ATLANTA, April 10, 2011 /PRNewswire/ -- NASDAQ OMX (NDAQ) and IntercontinentalExchange (ICE) today issued the following statement in response to the summary rejection by NYSE Euronext (NYX) of their joint proposal to acquire NYSE Euronext, valued at $43.13 per share in cash and stock, as of the close of trading on Friday, April 8, 2011.

NYSE Euronext's Board of Directors, without engaging in any dialogue or discussion, has summarily elected to deny its stockholders the opportunity to benefit from a clearly superior proposal to the announced transaction with Deutsche Boerse, a proposed transaction that is indisputably financially inferior.

  • This NASDAQ OMX/ICE transaction would create two global leading exchanges, one primarily focused on cash equities and the other on derivatives. This reduces execution risk and allows investors to make their own allocation decisions.
  • The superior cash and stock proposal from NASDAQ OMX and ICE provides NYSE Euronext's stockholders with immediate value and a higher premium to the proposal from Deutsche Boerse.
  • There is greater potential for long-term value creation under the NASDAQ OMX/ICE proposal by placing NYSE Euronext's businesses under management teams with proven track records of unlocking value through successful merger integrations.
  • Best of breed management of NASDAQ OMX and ICE would create two focused alternatives in cash equities and derivatives with less management risk than the conglomerate proposed by NYSE Euronext/Deutsche Boerse.
  • There are significant execution and integration risks to stockholders with the proposed NYSE Euronext/Deutsche Boerse transaction, given that both managements have histories of failing to achieve promised objectives in previous cross-border merger integrations and the transaction faces European competition hurdles.
  • NASDAQ OMX and ICE are committed to a prudent use of leverage to finance the transaction. In particular, NASDAQ OMX is focused on maintaining its investment-grade credit rating.

Commenting on NYSE Euronext's announcement, Robert Greifeld, Chief Executive Officer of NASDAQ OMX said, "NYSE Euronext's Board of Directors is depriving its stockholders of the benefits of a superior proposal, disregarding the fundamental corporate governance principles that it has espoused for the rest of corporate America. The feedback we have received from NYSE Euronext stockholders is very positive, and we would expect NYSE Euronext would, at the very least, meet with us and our advisors to discuss the merits of the proposed combination."

Jeffrey C. Sprecher, Chairman and Chief Executive Officer of ICE said, "By declining to meet with us, the NYSE Euronext Board is ignoring its obligations to its stockholders, which is surprising given the role that NYSE Euronext sets for issuers in establishing good corporate governance. NASDAQ OMX and ICE would not have made this joint proposal without a high degree of confidence that our proposal is both superior for NYSE Euronext's stockholders and capable of consummation. I would expect that NYSE Euronext's stockholders will make their displeasure known to the Board."

"We will continue meeting with investors, customers and regulators to highlight the many ways in which our proposal is superior, not only for the stockholders of NYSE Euronext, but also for market participants in the U.S. and Europe which would benefit from a more efficient and competitive marketplace," Sprecher added.

NASDAQ OMX and ICE reaffirmed their interest in acquiring NYSE Euronext given the benefits to stockholders of all three companies. The NASDAQ OMX/ICE proposal provides NYSE Euronext stockholders with exposure to two focused players in equities and derivative exchanges, while the Deutsche Boerse proposal offers exposure to a single diversified exchange that may receive a conglomerate discount. The NASDAQ OMX/ICE proposal also offers a strategically attractive alternative with stronger potential upside in two best-in-class operators given the superior growth prospects and significant, realizable combined synergies of $740 million annually. NYSE Euronext and Deutsche Boerse, by comparison, have both taken significant write-downs on previous cross-border transactions they have engineered.

Under the terms of the NASDAQ/ICE proposal, 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. As part of the proposal, ICE would purchase NYSE Euronext's futures businesses, and NASDAQ OMX would retain NYSE Euronext's remaining businesses, including the NYSE Euronext stock exchanges in New York, Paris, Brussels, Amsterdam and Lisbon, as well as the U.S. equity options business.

The NASDAQ OMX/ICE proposal provides a premium that is a 17% increase over the current implied value of the Deutsche Boerse proposal, and an 11% premium over the current NYSE Euronext stock price, as of April 8, 2011. Equally, NYSE Euronext's suggestion that the Deutsche Boerse proposal somehow provides greater long term value has already been rejected by investors around the world. Since the announcement of Deutsche Boerse's acquisition of NYSE Euronext on February 15, 2011, the value of Deutsche Boerse's stock, in euros, has declined by 9%.

NASDAQ OMX and ICE are confident that their proposed transaction will gain regulatory approvals in all the necessary jurisdictions. NASDAQ OMX and ICE have developed a realistic and actionable plan for dealing with any antitrust issues.

While NYSE Euronext Board raised unacceptable execution risk as a reason for rejecting the NASDAQ OMX/ICE proposal, it failed to acknowledge the significant execution risk associated with the Deutsche Boerse proposal, including the significant competition issues created by the proposed Deutsche Boerse/NYSE Euronext combination in Europe given the dominance the resulting entity would have in the European derivatives market.

NYSE Euronext's response does not change NASDAQ OMX and ICE's belief in the strategic merits of their proposal or the ability to consummate the transaction. Many of the perceived concerns with the NASDAQ OMX and ICE proposal can be overcome through the due diligence process.

Both NASDAQ OMX and ICE have received strong support from a group of leading institutions, including Bank of America and Wells Fargo, which together are prepared to arrange the fully committed financing required to complete the transaction.

Additional Details

All details and other supporting information related to this proposal are available on http://www.nasdaq.com/deal and http://ir.theice.com.

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