Nasdaq OMX Group and Intercontinental Exchange Inc promised to pay a $350 million fee to NYSE Euronext if regulators knock down their takeover offer, in a bid to get NYSE to start deal talks.
Nasdaq and ICE also said they had committed financing from banks to back their $11.3 billion bid for NYSE, and expected U.S. antitrust regulators to start a review of their bid soon. A merged Nasdaq and NYSE would have a virtual stranglehold on U.S. stock listings.
The announcement was designed to address two key concerns raised by NYSE's board: antitrust risk and strategic fit. NYSE had unanimously rejected Nasdaq and ICE's bid in favor of a $10.2 billion deal with Germany's Deutsche Boerse AG.
NYSE said on Tuesday it will review the revised bid submitted by Nasdaq and ICE. But the $350 million reverse break-up fee offered by Nasdaq and ICE falls far short of the $1 billion or more that sources have said NYSE would likely want.
I don't know that it moves the needle, said Patrick O'Shaughnessy, an equity research analyst with Raymond James. The only real change to deal terms is the breakup fee, and I am not sure that it is large enough to sway the NYSE board.
Nasdaq and ICE said they have lined up financing commitments of $3.8 billion from banks, and planned to buy $66 million worth of NYSE Euronext voting shares. That would represent 0.7 percent of the company's market value based on its latest closing stock price of $38.32.
ICE CEO Jeffrey Sprecher told Reuters in an interview that the offer addresses deficiencies in their original bid, as reported by the media. We had no direct feedback from the company, he said. We are going back to demonstrate to the company that it is nailed down.
Both takeover offers face tough regulatory reviews on both sides of the Atlantic, complicating things for investors betting on which bid -- if any -- will prevail.
Sprecher and Nasdaq CEO Bob Greifeld said they expected the board to start conversations with them, and pointed out that Deutsche Boerse had not offered NYSE a reverse break-up fee.
They could be displeased with our reverse breakup fee but the important point is that in their existing deal with Deutsche Boerse, there is no breakup fee, Greifeld said.
Nasdaq and ICE said they have begun talking with the U.S. Department of Justice's antitrust division about their bid. Greifeld said they were giving the department a tremendous amount of data and had been meeting with them.
So it is our hope that after six or seven weeks in the process that we will start getting some feedback from them, Greifeld said. But making clear, it is up to them to decide how and when they are going to give us feedback. We don't control that timing.
Executives at all four exchanges have also taken their respective cases to NYSE shareholders.
Sprecher and Greifeld said in a letter to NYSE Euronext Chairman Jan-Michiel Hessels that early talks with NYSE shareholders have made them confident their bid was superior.
Based on our own conversations with your stockholders, we sense that they want the Board to engage with us to determine if, in fact, our proposal is better for NYSE Euronext, they wrote in a letter dated April 19.
Deutsche Boerse said it remained committed to its agreement with NYSE, and was moving ahead with integration planning.
NYSE's shares were up 0.5 percent at $38.51, Nasdaq was off 0.4 percent at $27.45 and ICE slid 0.06 percent to $119.77 in early afternoon.
(Reporting by Phil Wahba, additional reporting by Nadia Damouni; editing by Dave Zimmerman, Derek Caney and Matthew Lewis)