Nasdaq chief furious over rejection of NYSE bid

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The Independent Online

Nasdaq has appealed to shareholders in NYSE Euronext, pressing the case for its $11.3bn (£6.9bn) takeover offer, after the NYSE board summarily rejected the bid and said it would stick to a lower-priced deal to merge with Germany's Deutsche Börse.

Bob Greifeld, the Nasdaq chief executive, reacted angrily to the decision, saying it flew in the face of the corporate governance rules that the NYSE espoused for companies listed on its exchanges.

"NYSE Euronext's board of directors is depriving its stockholders of the benefits of a superior proposal, disregarding the fundamental corporate governance principles that it has espoused for the rest of corporate America," he said. "The feedback we have received from NYSE stockholders is very positive, and we would expect NYSE would, at the very least, meet with us and our advisers to discuss the merits of the proposed combination."

NYSE said on Sunday that while the present value of Nasdaq's offer was higher than the Deutsche Börse bid, the "highly conditional" nature of the offer made it an unattractive proposal. Jan-Michiel Hessels, the NYSE chairman, said: "Breaking up NYSE Euronext, burdening the pieces with high levels of debt, and destroying its invaluable human capital, would be a strategic mistake."

Nasdaq's bid for the much larger NYSE would consolidate the two best-known US stock markets and save Nasdaq from being frozen out of the latest wave of exchange consolidations. It made its bid in partnership with Intercontinental Exchange, the fast-growing commodities exchange business, and NYSE's assets would be split between the pair. They pitched their offer at $11.3bn, in a combination of cash and Nasdaq and ICE shares. Deutsche Börse's cash-and-stock offer is currently valued at $9.8bn.

With the London Stock Exchange planning to merge with its Toronto counterpart and consolidation between the new electronic trading platforms, Nasdaq faces losing its place in the big league of world exchanges. However, combining Nasdaq and the New York Stock Exchange could attract regulatory scrutiny.

A Deutsche Börse merger is also fraught with difficulty, though. It would create a behemoth in Europe, combining a majority of the big national equity markets and merging Europe's two big derivatives exchanges.

NYSE's rejection of Nasdaq's approach relieves pressure on Deutsche Börse to raise its offer at this stage, although shares in NYSE Euronext were still trading above the level of the German bid yesterday, suggesting that speculators continue to believe a bidding war will ensue.

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