Exchange groups Nasdaq OMX and IntercontinentalExchange (ICE) have made a renewed takeover offer that values NYSE Euronext 21% higher than a rival bid by Deutsche Börse.
On 11 April, NYSE Euronext said that accepting the initial Nasdaq OMX/ICE approach would be a “strategic mistake”, but the two suitors have newly submitted a proposed merger agreement consistent with the terms of the planned business combination agreement with Deutsche Börse.
The pair have received committed financing of US$3.8 billion from a group of institutions; Nasdaq OMX from a syndicate of banks including Bank of America, Nordea Bank, Skandinaviska Enskilda Banken and UBS; ICE from banks including Wells Fargo and Bank of America.
Nasdaq OMX/ICE have said they are prepared to pay a reverse termination fee of US$350 million to NYSE Euronext in the event that they are unable to obtain necessary antitrust and competition approvals for the takeover. They have in initiated US antitrust review processes and expect the reviews to commence shortly.
“This should eliminate any concerns that the NYSE Euronext board has about engaging in discussions with us. It's time to allow a reasonable and expeditious diligence process to begin,” said Robert Greifeld, CEO of Nasdaq OMX.
Jeffrey Sprecher, chairman and CEO of ICE, added, “Based on the feedback we have heard from NYSE Euronext stockholders, we are more confident than ever that the proposed NASDAQ OMX/ICE transaction is better for them, the markets and the exchange's customers. We trust that the NYSE Euronext board will seek to enhance the value to its stockholders by meeting with us to evaluate our superior proposal.”
Based on 18 April closing prices, the Nasdaq OMX/ICE deal outlined in the proposed merger agreement is valued at US$42.67 per NYSE Euronext share. This is 21%, or US$2 billion, above the US$35.29 value per share under the Deutsche Börse transaction. According to a joint statement, the combined company would incorporate the NYSE name and floor “and strengthen investor confidence in US equity markets, which have been shaken by fragmentation”.
In a letter to Jan-Michiel Hessels, chairman of the board of directors”¨at NYSE Euronext, which references the NYSE Euronext board's rejection of the first approach, Sprecher and Greifeld wrote, “While we regret the board's decision to reject our proposal, …we take issue with the board's statements that the proposed acquisition of NYSE Euronext by Deutsche Börse is strategically more attractive than our proposal.”