Nasdaq OMX Group Inc. (NDAQ) is in talks with lenders about funding a possible bid for NYSE Euronext to counter Deutsche Boerse AG (DB1)’s more than $9 billion offer for the exchange operator, said two people with knowledge of the matter.
IntercontinentalExchange Inc. (ICE) is working with Nasdaq on a potential offer, and the two sides are discussing what assets ICE would buy and at what price, said one of the people, who declined to be identified because the matter is private. At the same time, Nasdaq is trying to line up financing, the person said. The situation is fluid, and Nasdaq may decide whether to bid in the next few days, the person said.
Nasdaq, a New York-based exchange operator run by Chief Executive Officer Bob Greifeld, has so far been left out of merger agreements since October encompassing NYSE, London Stock Exchange Group Plc (LSE), Deutsche Boerse, Canada’s TMX Group Inc. (X), Singapore Exchange Ltd. (SGX) and Australia’s ASX Ltd. (ASX)
“If you’re not one of the top four to five players, you might be relegated to being a regional player,” Larry Tabb, founder of New York-based research firm Tabb Group LLC, said yesterday.
Nasdaq would finance an offer with about $5 billion in debt from lenders led by Bank of America Corp. (BAC) and $5 billion in asset sales, DealReporter said today, citing a person familiar with the situation. ICE would buy NYSE Euronext’s European assets, DealReporter said. Frank De Maria, a spokesman for Nasdaq, NYSE Euronext’s Ray Pellecchia, ICE’s Lee Underwood and Bank of America’s John Yiannacopoulos and Deutsche Boerse’s Naomi Kim declined to comment.
Deals Since October
Exchanges worldwide are merging to cut costs and offset lower profitability from equities. Deutsche Boerse agreed Feb. 15 to buy NYSE Euronext (NYX) for $9.53 billion, creating the largest exchange operator. London Stock Exchange offered 1.94 billion pounds ($3.14 billion) on Feb. 9 for TMX Group, which runs Canada’s main markets. Singapore Exchange bid A$8.35 billion ($8.43 billion) in October for ASX, which runs the Australian stock market.
Last week, Tokyo Stock Exchange Group Inc. President Atsushi Saito he may hold merger discussions with Osaka Securities Exchange Co. There have been almost $100 billion of completed exchange takeovers since January 2000, according to data compiled by Bloomberg.
Nasdaq has been studying its options after rival exchange operators announced mergers last month, according to people with knowledge of the matter. Bank of America is advising Nasdaq on its potential bid for NYSE, and JPMorgan Chase & Co. (JPM) is advising Nasdaq on options regarding the London Stock Exchange-TMX Group deal, the people said.
Prospects of a bidding war for NYSE Euronext sent shares of the New York Stock Exchange’s owner 5.5 percent higher, climbing above the takeover price Deutsche Boerse Group agreed to pay in February. NYSE Euronext rose 4.5 percent to $36.55 at 4 p.m. in New York versus Deutsche Boerse’s $34.92 offer. The shares advanced as much as 5.5 percent to $36.88. Nasdaq OMX fell 3 percent to $26.37, and ICE lost 1 percent to $124.79.
Nasdaq shares have a market value of $4.65 billion, 9th out of 23 companies in the Bloomberg World Exchanges Index, where the average value is almost $5.5 billion. NYSE Euronext is valued at $9.55 billion and Deutsche Boerse is $14.5 billion.