Nasdaq bid for NYSE shattered by competition authorities

Nasdaq's dream of buying its bigger, older and more famous rival, the New York Stock Exchange, has been shattered by a ruling from the US competition authorities, which said that combining the country's two main stock markets would create an unacceptable monopoly.

The Justice Department's speedy and definitive conclusion confirmed what the NYSE's parent company had said all along, namely that the Nasdaq $11bn (£7bn) bid was "an empty vessel" that could not win regulatory approval. NYSE Euronext is instead pursuing a merger with Deutsche Börse which would create the world's largest exchange group and a powerhouse in European derivatives trading.

Nasdaq was bidding jointly with IntercontinentalExchange, a derivatives trader which would have taken over the derivatives side of NYSE Euronext, including London-based Liffe. The pair formally withdrew their offer yesterday, leaving Nasdaq without a dance partner in this latest wave of global exchange consolidation.

Investor speculation immediately turned to other potential bid targets for Nasdaq, or whether the company might now be vulnerable to a takeover approach.

Bob Greifeld, the chief executive of Nasdaq OMX, said he was "surprised and disappointed" by the decision. "We saw a unique opportunity to create more value for stockholders and strengthen the US as a centre for capital formation amid an ongoing shift of these vital activities and jobs outside of our country."

In the end, playing the nationalist card failed to work for Nasdaq. Even Chuck Schumer, the populist Senator for New York, indicated that he supported the German takeover deal, citing fears of higher job losses if Nasdaq bought the NYSE.

For the Justice Department, the concern was about allowing one company to have a stranglehold over US company listings. Christine Varney, head of its antitrust division, said: "The acquisition would have removed incentives for competitive pricing, high quality of service, and innovation in the listing, trading and data services these exchange operators provide to the investing public and to new and established companies that need access to US stock markets."

Deutsche Börse's $9bn bid has regulatory hurdles of its own to overcome, but the two companies signalled their intention to press ahead with a combination even before the outcome of competition reviews in Europe. The two companies' shareholders are due to vote on the deal in July.

Joaquin Almunia, vice president of the European Commission responsible for competition policy, indicated in a speech yesterday that the review could be intense. "We should prevent that any one entity or group controls essential infrastructure – be it a trading platform, a clearing platform or a pre-trading service – to the benefit of a restricted few," he said, although he did not refer directly to the NYSE–Deutsche Börse deal.

Nasdaq shares rose on relief it would not be issuing new stock and debt to pay for a deal, but analysts began speculating on its next move. The most obvious target, they said, was the LSE, particularly as it, too, appears to have had its bid plans thwarted.

LSE: bidder or bid target?

Shares in the London Stock Exchange rose almost 7 per cent last night amid speculation that it may end up as a target for the US exchanges Nasdaq and ICE after a group of Canadian financial institutions challenged its planned merger with the Toronto-based TMX.

Maple Group Acquisition Corporation, a consortium of Canadian banks and pension funds, has tabled a $3.7bn (£2.3bn) takeover proposal in an attempt to derail the LSE's ambitions.

Luc Bertrand at National Bank of Canada, which is part of Maple, said: "It presents a clear path to creating additional value by optimising the balance sheet, margin expansion, improved multiple potential and the ability to pursue international growth opportunities."

Although LSE and TMX stood by their agreement, the Maple proposal would please Canadian critics who have bemoaned the possibility of a national institution falling into foreign hands. Maple said its plans would not need to be approved under the Investment Canada Act, which would require the LSE and TMX to show that their merger was of "net benefit" to the country. The legislation applies only to deals involving foreign companies and was recently invoked to block a bid by the miner BHP Billiton for Canada's Potash Corp.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
a clockwork orange, stanley kubrick
film
Extras
The Tesco Hudl2: An exceptional Android tablet that's powerful, well-built and outstanding value
indybest

Life and Style
food + drinkAuthor DBC Pierre presents his guide to the morning after
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas