Nasdaq OMX Group and IntercontinentalExchange on Monday formalized their hostile bid for NYSE Euronext, approving a direct offer for the biggest market operator and taking it to shareholders.
The offer, designed to circumvent NYSE Euronext directors who have twice rejected the proposal, would be at the same terms as the original $11.3 billion proposal announced April 1. NYSE Euronext said it prefers its Feb. 15 merger agreement with Deutsche Boerse, valued about 8% below the Nasdaq bid.
“The NYSE Euronext board has continually challenged the seriousness of our proposal and refused to engage us in discussion despite the positive feedback we have received from their stockholders,” Robert Greifeld, CEO of Nasdaq OMX, said in a statement. “The commencement of this exchange offer should convince the NYSE Euronext board of the seriousness of our intentions.”
While announcing a tender offer for NYSE Euronext shows Nasdaq OMX and ICE’s urgency, it may carry little weight because of rules in the exchange’s governing documents limiting how much outsiders can own. The bylaws, mandated by the SEC, prevent investors from accumulating a 20% stake in the company without the approval of the board.
The Nasdaq-ICE stock-and-cash bid is valued at $42.56 a share based on prices Monday, compared with $39.36 from Deutsche Boerse.
NYSE Euronext agreed on Feb. 15 to an all-stock deal with Deutsche Boerse, a move that would create the world’s largest stock exchange operator. Nasdaq OMX of New York and Atlanta’s ICE made their first offer April 1 and sweetened it on April 19 with a $350 million reverse breakup fee and firmer funding commitments from lenders. NYSE Euronext’s board held to its rejection, saying the companies’ offer still faced “unacceptable” hurdles from antitrust regulators.
NYSE Euronext CEO Duncan Niederauer considers the Deutsche Boerse proposal a merger of equals that fits the New York-based company’s long-term strategy of increasing revenue through expansion.
When rejecting the Nasdaq OMX-ICE offer, NYSE Euronext’s board said the combination would face too many hurdles to win approval from antitrust regulators and would lead to the company having too much debt.
NYSE Euronext shareholders will vote on the Deutsche Boerse deal on July 7. Owners controlling at least half of NYSE Euronext must back the transaction for it to be approved, compared with 75% at Deutsche Boerse.
NYSE Euronext’s five biggest owners as of Dec. 31 — T. Rowe Price Group, BlackRock, State Street Corp., Vanguard Group and Legg Mason — controlled 22% of the company’s stock, Institutional Shareholder Services data show.