NYSE Euronext, the parent company of the New York Stock Exchange, was sued by shareholders seeking to block its planned $9.53 billion sale to Deutsche Boerse AG, a deal that would create the world’s largest owner of equities and derivatives markets.
The all-stock transaction is “grossly inadequate” and resulted from a flawed process, lawyers for shareholder Samuel T. Cohen said in a complaint made public today in Delaware Chancery Court in Wilmington. The proposed sale values NYSE at less than targets in similar deals, such as London Stock Exchange Group Plc’s purchase of Canada’s TMX Group Inc., according to the lawsuit.
“There appears to have been no sales process, and the proposed transaction did not emerge from an auction,” Cohen’s lawyers said in the complaint. “A board that provides a would-be acquirer with an exclusive opportunity to bid on a company and fails to conduct a market-check, does not act in the interests of shareholders.”
Investors said in another lawsuit, filed today in New York Supreme Court, said the sale will result in New York Stock Exchange shareholders owning 40 percent of the acquired company, with the remaining 60 percent held by Deutsche Boerse AG. The sale offers “no meaningful premium to NYSE’s public shareholders” and will “result in a loss of control of the company and its prospects,” according to the complaint.
Ray Pellecchia, a spokesman for New York-based NYSE Euronext, had no immediate comment on the Delaware complaint. Pellecchia didn’t immediately return another call after regular business hours seeking comment on the New York case.
Under the deal announced yesterday, Deutsche Boerse, which runs the Eurex futures platform and Frankfurt Stock Exchange, is swapping one share of its own stock for one share in the company, while every NYSE Euronext share will be converted into 0.47 share, the companies said in a statement.
The transaction values NYSE Euronext at 8.3 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That compares with 9.35 times Ebitda for TMX and 18.35 for ASX Ltd., the Australian stock-market operator being acquired by Singapore Exchange Ltd.
NYSE Euronext fell $1.40, or 3.7 percent, to $36.72 in New York Stock Exchange composite trading. Frankfurt-based Deutsche Boerse fell 1.55 euros, or 2.6 percent, to 58.50 euros in German trading on the Xetra exchange.
The Delaware case is Cohen v. NYSE Euronext, CA6198, Delaware Chancery Court (Wilmington). The New York Case is KT investments II LLC v. Jan-Micheiel Hessels, 650407, New York State Supreme Court (Manhattan).