NYSE Euronext and Deutsche Boerse AG are weighing several options to win support for their $10.2 billion deal, including paying special dividends to shareholders, three sources briefed on the matter said on Wednesday.
NYSE could give its own shareholders a special dividend at the time the Deutsche Boerse deal closes, sources said.
Other options include NYSE Euronext and Deutsche Boerse together buying back shares or paying a dividend after the deal is completed, one of the sources said.
The idea is to win shareholder support for the NYSE Euronext-Deutsche Boerse combination over a higher but unsolicited offer for NYSE Euronext by Nasdaq OMX Group and IntercontinentalExchange Inc .
While NYSE Euronext and Deutsche Boerse currently pay dividends, Nasdaq and ICE do not.
Rating agencies have raised concerns about Nasdaq's debt levels. Moody's Investors Service said earlier this month the bid made it more likely to cut Nasdaq's debt ratings to junk over the medium term, while Standard & Poor's said it might cut the exchange's ratings to junk in the near term.
Two junk ratings could create a headache for the combined exchange because NYSE bondholders would have the right to force the company to buy back their $2.1 billion of debt. Nasdaq could be forced to raise even more money.
Still, Nasdaq Chief Executive Robert Greifeld has said that it would consider dividends as a way to return capital to shareholders if its bid for NYSE Euronext was successful.
NYSE, Nasdaq, and Deutsche Boerse declined to comment. The sources requested anonymity because the talks are not public.
Executives from all four exchange operators have met with shareholders to press their cases in the last few days.
The options being considered by NYSE Euronext and Deutsche Boerse are in part based on those meetings, one of the sources said.
Further highlighting their desire to fend off an unsolicited bid, NYSE Euronext and Deutsche Boerse have also identified additional cost savings from their planned combination, one of the sources said.
Nasdaq and ICE bid $11.3 billion to buy and divide the centuries-old NYSE between them. The offer was a 12 percent premium to Deutsche Boerse's acquisition plan, unveiled in February.
NYSE's board dismissed the counteroffer on Sunday as too risky and contrary to the company's strategy, though NYSE shareholders will likely have to decide between the competing offers.
Under the Deutsche Boerse deal, the shareholders of the German exchange operator would get 60 percent of the combined entity, while NYSE Euronext holders would get the rest.
Deutsche Boerse does not want to change that split, one of the sources said.
NYSE Euronext's shares closed up 1.1 percent, while Nasdaq was off 0.1 percent and ICE was up 0.6 percent. Deutsche Boerse closed up 0.1 percent in Germany.
(Reporting by Paritosh Bansal and Jonathan Spicer; Editing by Steve Orlofsky, Bernard Orr)