Merger hopefuls Deutsche Boerse and NYSE Euronext attempted to dazzle investors with forecast-beating results as they stepped up efforts to see off rival bidder Nasdaq.
With a crucial NYSE shareholder meeting on the $10 billion German merger plan kicking off in New York on Thursday, the battle is on to convince investors of the merits of the bid, which is about $1 billion less than Nasdaq's counter offer.
Some market experts said Deutsche Boerse and NYSE's first quarter results underlined the strength of the two management teams, with the Boerse in particular easily beating analyst forecasts for sales, earnings and net profit.
NYSE Euronext, the transatlantic exchange operator pursued by Nasdaq, also topped average forecasts for revenues as it re-emphasized that growth prospects would be enhanced and accelerated by the German all-share deal.
These are solid results which will encourage shareholders that the NYSE management, and their plan to join with Deutsche Boerse, are credible, said Herbie Skeete, managing director at exchange consultants Mondo Visione.
Nevertheless, some investors have urged NYSE's down-to-earth head Duncan Niederauer, a former Goldman Sachs partner, to at least talk to Nasdaq -- and many expect the merger allies to narrow the gap between the rival bids before a key July 7 investor vote on the deal.
But on Thursday, Niederauer struck a bullish tone.
He told shareholders in New York that the Deutsche deal was the difference maker, allowing it to increase employee productivity levels, diversify its business and save $3.0 billion in clearing costs.
FACING THE CROWD
The shareholder meeting is the first time Niederauer has faced investors since Nasdaq teamed up with Atlanta-based energy market IntercontinentalExchange to launch an April 1 bid -- a deal he has staunchly resisted.
NYSE's board took just ten days to snub Nasdaq this month, dismissing its bid as strategically unattractive and warning of heavy U.S. job losses from such a deal.
NYSE and Deutsche Boerse are hoping to convince shareholders to back their deal partly with the promise of savings.
Niederauer raised savings forecasts from the potential deal this week, saying a German merger would generate 400 million euros ($587 million) -- 100 million more than originally stated.
Meanwhile the counterbidders, which are promising $740 million in savings, have issued an open letter to NYSE shareholders to suggest they force NYSE directors into talks.
But both NYSE suitors also face regulatory hurdles.
Deutsche Boerse-NYSE would be the dominant force in European futures trading and the largest European equities group, with a strong presence in U.S. options trading.
Under the alternative plan, Nasdaq would take NYSE Euronext's equities businesses, which would give the merged firm a monopoly over U.S. listings and the vast majority of U.S. share trading. ICE, when combined with NYSE Euronext's European futures arm, would also end up with a strong presence in the U.S. and European futures and options markets.
Emphasizing its cost control abilities, Deutsche Boerse raised its outlook for cost savings as it posted earnings before interest and taxes (EBIT) of 316.3 million euros on sales of 558.6 million euros. NYSE posted a 19 percent rise in net profit to $155 million on five percent higher revenues of $679 million.
(Additional reporting by Jonathan Spicer and Paritosh Bansal in New York)
(Editing by Erica Billingham, Sophie Walker and Jane Merriman)