The board of exchange group NYSE Euronext has rejected the joint bid made for its business by fellow US market operators Nasdaq OMX and the InterContinental Exchange (ICE) on the grounds that the deal would be a “strategic mistake”.
Nasdaq OMX and ICE made a bid for approximately US$11.3 billion for NYSE Euronext on 1 April, rivaling a US$9.7 billion bid made by Deutsche Börse on 15 February.
Under the terms of the Nasdaq OMX/ICE bid, ICE would have purchased NYSE Euronext’s derivatives businesses, while Nasdaq OMX would have taken control of the group's remaining businesses, including stock exchanges in New York, Paris, Brussels, Amsterdam and Lisbon and its US options business.
“Breaking up NYSE Euronext, burdening the pieces with high levels of debt, and destroying its invaluable human capital, would be a strategic mistake in terms of where the global markets are going, and is clearly not in the best interests of our shareholders,” said Jan-Michiel Hessels, chairman, NYSE Euronext. “The highly conditional break-up proposal from Nasdaq/ICE would also require shareholders to shoulder unacceptable execution risk.”
NYSE Euronext said it would continue to pursue a combination with Deutsche Börse, which it considered would create more long-term value for shareholders as well as being the likelier of the deals to be completed.
“We are confident that the combination with Deutsche Börse will create compelling value for our shareholders,” added Hessels. “ With Deutsche Börse, we are committed to creating the world's premier exchange group – a geographically diverse business, with strengths in multiple asset classes across the spectrum of capital markets services. The new company will fundamentally change the global exchange industry, establishing a world leader in both derivatives and risk management and the premier global venue for capital-raising.”
The proposal by Deutsche Börse to purchase NYSE Euronext detailed €300 million (US$433.7 million) worth of cost savings compared to the US$740 million offered by Nasdaq OMX. However, the NYSE Euronext/Deutsche Börse combination is expected to face competition concerns, given the monopoly it would create in the European derivatives market.