Investors are betting on a counter-bid for NYSE Euronext, the parent company of the New York Stock Exchange, which has agreed to merge with Germany's Deutsche Börse, amid talk that its smaller US rival Nasdaq OMX could make a takeover approach of its own.
Nasdaq has been examining the possibility of teaming up with a partner to make a joint bid for NYSE, in a move that would consolidate the two best-known American stock markets – and save Nasdaq from being frozen out of the latest wave of exchange consolidation.
It hopes to gate-crash a union that, by combining Deutsche Börse's dominant equities and derivatives European operations with NYSE's market-leading US stock market, will create that largest exchange group in the world. An all-American deal would also help counter some of the nationalist grumbling that accompanied news of the sale of the New York Stock Exchange to a German company.
One deal under consideration is a joint bid by Nasdaq and Intercontinental Exchange, the fast-growing commodities exchange business, in which NYSE's assets would be split between the pair. Nasdaq would get its hands on the equities trading business, including the New York Stock Exchange's iconic Manhattan trading floor, while ICE would retain NYSE's highly profitable derivatives exchanges in Europe.
While financial-sector analysts put the chances of a Nasdaq bid at less than 50-50, the speculation has kept NYSE shares trading above their implied value under the terms of the Deutsche Börse merger. NYSE shareholders will get 0.47 shares in the combined company for each share they own, according to the deal signed last week, which at lunchtime yesterday would have been worth $35.84 based on the Deutsche Börse share price. In fact, NYSE shares traded at $36.61.
Nasdaq shares slipped as it became clear that the company is hoping to be a buyer in the current wave of consolidation, rather than to become a takeover target. It apparently talked to CME Group, owner of the Chicago Mercantile Exchange, the largest derivatives exchange in the US, about teaming up on a NYSE bid.
Ed Ditmire, an analyst at Macquarie, said Nasdaq faces an uphill battle if it hopes to break up the NYSE-Deutsche Börse marriage, because it is smaller and its shares are less highly valued than NYSE. "I think what we are seeing is contingency planning, making sure that Nasdaq is ready in case something goes wrong with the NYSE-Deutsche deal," he said. The deal has raised competition issues in Europe because it combines two of the three largest derivatives exchanges.
With the London Stock Exchange planning to merge with its Toronto counterpart and even consolidation between the new electronic trading platforms that have sprung up to rival traditional exchanges, Nasdaq faces losing its place in the big league of world exchanges.
"Nasdaq has traditionally been a buyer, but just looking at its market capitalisation you see it is closer to the bottom end of the exchange rankings," Mr Ditmire said.
"Its next move might be as a takeover target."