Nasdaq tightens vise on NYSE

Updated: 2011-05-03 15:42


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NEW YORK - Nasdaq OMX Group and IntercontinentalExchange Inc will take their takeover bid for NYSE Euronext straight to the Big Board's shareholders as they try to corner the company into talks.

Nasdaq and ICE said on Monday that they will launch a tender offer for NYSE's shares later this month. The move comes after NYSE's board twice rejected the $11 billion unsolicited offer in favor of its existing $10.2 billion deal with Deutsche Boerse.

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Nasdaq and ICE's move to go hostile could force NYSE to the negotiating table or to fight back with defensive measures if shareholders step up pressure. It could also pressure Deutsche Boerse into sweetening its deal.

But it is unlikely to be the final word in what may be a lengthy takeover battle.

NYSE could still sit tight. The gap between Nasdaq-ICE and Deutsche Boerse bids -- a key shareholder concern -- has narrowed to 8 percent from nearly 20 percent in the last few weeks, thanks in part to a weaker US dollar.

The Nasdaq-ICE exchange offer will also have conditions that could yet derail it.

"We believe the laundry list of conditions attached to the offer virtually guarantee that it will never be executed," said Patrick O'Shaughnessy, an analyst at Raymond James.

"The conditions to the tender offer essentially state that Nasdaq/ICE's proposal must first be approved by the NYSE board, so this offer does not seem to be hostile at all."

Shareholders of the New York Stock Exchange parent have nonetheless urged it to at least talk to Nasdaq and ICE about their deal.

"I am bothered that NYSE has avoided any conversation with Nasdaq. I feel as if they are biased to the Deutsche offer even though economically it's not equal," said Keith Wirtz, chief investment officer at Fifth Third Asset Management, which holds more than 100,000 shares of NYSE Euronext.

"The proposals on the table are not likely to be the last," Wirtz said. "I really think the German company is going to be forced to react to the actions of Nasdaq."


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