Nasdaq's offer faces major hurdles
By Jonathan Spicer and Paritosh Bansal |
March 17, 2011, Thursday
|
Print Edition
Print Edition
NASDAQ OMX Group Inc's possible counterbid for NYSE Euronext faces some big hurdles, including funding a complicated deal and convincing Big Board shareholders that it's better than Deutsche Boerse's offer, experts said.
Nasdaq is moving closer to making a bid to trump Deutsche Boerse's more than US$9 billion deal for NYSE Euronext, but it must first find US$5 billion of debt financing.
Any rival offer would also have to account for a relatively steep 250 million euro (US$347.5 million) termination fee on the NYSE-D.Boerse deal.
The exchange would also need to team up with the Intercontinental Exchange Inc which would look to buy NYSE Euronext's lucrative interest-rate future's business, a source said on Monday.
A Nasdaq offer could value NYSE Euronext between US$10 billion and US$13 billion, with Nasdaq paying US$5 billion to US$7 billion of the price, another source briefed on the situation said.
Negotiations were going on about the value of different pieces of NYSE that ICE and Nasdaq would buy as well as other deal terms, the sources said, declining to be named because these discussions are private.
On Tuesday morning at an industry conference in southern Florida, the news of a possible Nasdaq deal was center stage, as executives and regulators tried to parse out what motivates ICE CEO Jeffrey Sprecher and Nasdaq CEO Robert Greifeld.
"These guys are deal guys. But the odds of this succeeding are really low," said Joe Gawronski, president at Rosenblatt Securities, an agency broker that does a lot of research on market structure.
"Hostiles are particularly tough in the exchange industry," he said.
Nasdaq could make a rival offer this week, although the situation is still in flux, the source said.
Even friendly mergers have proven difficult to pull off in an industry in which exchanges are proud national symbols, and when politicians and regulators can block them.
"There is an outside risk, or concern, that our capital markets are controlled by non-US companies. It's a small concern, but it's out there," said Gerry Corcoran, CEO of Chicago broker RJO Futures.
In the end, "it will be an economic, rather than an emotional, decision," he said.
On the sidelines of the conference, hosted by the Futures Industry Association, Sprecher declined to comment on any possible counteroffer.
Earlier this month, Sprecher said both ICE and Nasdaq did not need to jump into a global mergers frenzy.
A successful counterbid would give ICE, an Atlanta-based futures specialist, a profitable gem in NYSE Euronext's London-based Liffe platform, which is strong in interest rate securities.
Nasdaq is moving closer to making a bid to trump Deutsche Boerse's more than US$9 billion deal for NYSE Euronext, but it must first find US$5 billion of debt financing.
Any rival offer would also have to account for a relatively steep 250 million euro (US$347.5 million) termination fee on the NYSE-D.Boerse deal.
The exchange would also need to team up with the Intercontinental Exchange Inc which would look to buy NYSE Euronext's lucrative interest-rate future's business, a source said on Monday.
A Nasdaq offer could value NYSE Euronext between US$10 billion and US$13 billion, with Nasdaq paying US$5 billion to US$7 billion of the price, another source briefed on the situation said.
Negotiations were going on about the value of different pieces of NYSE that ICE and Nasdaq would buy as well as other deal terms, the sources said, declining to be named because these discussions are private.
On Tuesday morning at an industry conference in southern Florida, the news of a possible Nasdaq deal was center stage, as executives and regulators tried to parse out what motivates ICE CEO Jeffrey Sprecher and Nasdaq CEO Robert Greifeld.
"These guys are deal guys. But the odds of this succeeding are really low," said Joe Gawronski, president at Rosenblatt Securities, an agency broker that does a lot of research on market structure.
"Hostiles are particularly tough in the exchange industry," he said.
Nasdaq could make a rival offer this week, although the situation is still in flux, the source said.
Even friendly mergers have proven difficult to pull off in an industry in which exchanges are proud national symbols, and when politicians and regulators can block them.
"There is an outside risk, or concern, that our capital markets are controlled by non-US companies. It's a small concern, but it's out there," said Gerry Corcoran, CEO of Chicago broker RJO Futures.
In the end, "it will be an economic, rather than an emotional, decision," he said.
On the sidelines of the conference, hosted by the Futures Industry Association, Sprecher declined to comment on any possible counteroffer.
Earlier this month, Sprecher said both ICE and Nasdaq did not need to jump into a global mergers frenzy.
A successful counterbid would give ICE, an Atlanta-based futures specialist, a profitable gem in NYSE Euronext's London-based Liffe platform, which is strong in interest rate securities.
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