Nasdaq as cheapest exchange makes it top deal target

CFO’s Resume

Carlyle Group LP, a private-equity firm based in Washington, might have the most knowledge of Nasdaq OMX. Its chief financial officer, Adena Friedman, was the exchange owner’s CFO until 2011.

Chris Ullman, a Carlyle spokesman, declined to comment.

Nasdaq OMX’s recent shift from supermajority voting to remove directors and approve other measures gives shareholders more influence, said Nell Minow, founder of GMI Ratings, which evaluates corporate governance. Nasdaq OMX had described the prior requirement as a defense against “coercive takeover tactics.”

“Takeovers should be hard, but they should not be so hard that they are impossible,” Minow said in a phone interview. “When companies have a supermajority in place, that’s very entrenching of management and it makes it possible for them to turn down opportunities that would be much better for the long- term sustainability of the enterprise.”

Peer Pressure

Stock exchanges generally get lower price-earnings ratios than venues focused on other assets, explaining why Nasdaq OMX’s multiple is relatively low, said Richard Repetto, a New York- based analyst at Sandler O’Neill & Partners LP. That may make the company potentially less attractive for acquirers as well, said Lee of Aite Group.

Still, Credit Suisse’s Chen said there’s a chance Nasdaq OMX could be forced into a merger if its rivals keep getting snapped up.

“There’s a low probability of that happening anytime soon,” the analyst said. Still, “if you’re running in a world where your competitors are gaining scale, then perhaps you would merge or find a bigger buyer.”

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