NYSE Board Backs Deutsche Boerse Bid Over Nasdaq-ICE Offer

Failing to win the board’s endorsement means Nasdaq OMX may have to take its case for a takeover to NYSE shareholders, who will be asked to approve the Deutsche Boerse merger. That proposal calls for Deutsche Boerse to combine its futures markets with New York-based NYSE Euronext’s. New York-based Nasdaq OMX’s offer, which is worth 16 percent more than its rival’s and is funded in some cases with debt, calls for selling the NYSE Liffe futures business to Atlanta-based ICE.

The New York Stock Exchange owner on Feb

Deutsche Boerse agreed to acquire the New York Stock Exchange owner on Feb. 15 for stock worth $9.53 billion at that time, helping propel a wave of exchange consolidation that has seen about $20 billion of deals announced in less than six months. The value of the company’s offer, which Niederauer calls a "merger of equals," has risen to $9.68 billion, or $37.06 a share. The combination "will create compelling value for shareholders of both companies," Deutsche Boerse said in an e- mailed statement today.

The NYSE Euronext board called the $11.3 billion offer from Nasdaq OMX and ICE "highly conditional" and said it would result in layoffs. Frank De Maria, a spokesman for Nasdaq OMX, said an in e-mail that "we are not surprised, however are disappointed at a response that anyway you look at it does not reflect the best interests of their shareholders." Kelly Loeffler, an ICE spokeswoman, didn’t return an e-mail and telephone call seeking comment.

Nasdaq OMX and ICE, the second-largest U.S. futures market, made a rival offer for NYSE Euronext on April 1. The unsolicited bid is 16 percent higher at $43.13 a share and includes $14.24 a share in cash. NYSE Euronext directors held a telephone briefing the day it was announced and no decision was made at that time, according to a filing last week. Niederauer told employees the day of the joint bid that during he would study it, the company was "fully committed" to the previous agreement.

The Deutsche Boerse all-stock agreement

The Deutsche Boerse all-stock agreement, which carries a 250 million euro breakup fee, would combine the two companies to create the world’s largest exchange operator, with executives focusing on growing revenues through derivatives and innovation operations. The Nasdaq OMX-ICE bid would break up NYSE Euronext, giving Atlanta-based ICE the Liffe derivatives markets and Nasdaq OMX the listings, equities and options businesses, saving costs on overlapping units and technologies.

Greifeld offered about $2.8 billion in stock and $2.1 billion in cash and said Nasdaq OMX would assume $2.1 billion in NYSE Euronext debt on the oher side of the coin for NYSE’s U.S. listings, equity and options businesses. ICE, based in Atlanta, offered $4.7 billion of its stock and $1.7 billion in cash, assuming no NYSE Euronext debt, for a total of about $6.3 billion for the Liffe futures unit.

The Liffe futures markets

With the Liffe futures markets, ICE would catapult to fourth from 14th in terms of global trading volume. ICE specializes in energy and commodities trading, with its only offering in financial products coming from currencies and equity indexes at its New York-based ICE Futures U.S. exchange. It produced $1.15 billion in revenue last year, with net income at 35 percent of that total. CME Group Inc. of Chicago is its bigger rival.