NYSE Euronext's board on Sunday rejected an unsolicited takeover bid by Nasdaq OMX Group Inc and IntercontinentalExchange Inc, and affirmed its plan to merge with Deutsche Boerse AG.
In a statement, NYSE Euronext said the directors found the $11.3 billion bid from Nasdaq and ICE strategically unattractive, with unacceptable execution risk.
The parent of the New York Stock Exchange also said the friendly $10.2 billion takeover bid from Germany's Deutsche Boerse announced in February is better for shareholders in the long term, and significantly more likely to be completed.
Breaking up NYSE Euronext, burdening the pieces with high levels of debt, and destroying its invaluable human capital, would be a strategic mistake in terms of where the global markets are going, and is clearly not in the best interests of our shareholders, NYSE Euronext Chairman Jan-Michiel Hessels said in a statement.
It is unclear how Nasdaq and ICE will respond to the rejection, and whether they might submit a new bid or take their earlier bid directly to NYSE Euronext shareholders.
Representatives of Nasdaq and ICE did not immediately return calls and e-mails seeking comment.
In announcing their cash-and-stock bid on April 1, Nasdaq and ICE had valued NYSE Euronext at $42.50 per share, 12 percent above Deutsche Boerse's bid.
Duncan Niederauer, NYSE Euronext's chief executive, would retain that title in a merger with Deutsche Boerse.
An NYSE Euronext merger with Deutsche Boerse would create the world's biggest financial exchange, but attract antitrust scrutiny given the combined companies' expected dominance in European derivatives trading and clearing.
Similarly, merging Nasdaq with the NYSE could prompt U.S. antitrust issues, given that the largest U.S. stock exchanges would enjoy a virtual monopoly on listings and dominance in trading U.S. cash equities and options. Job losses in New York City would also be a concern.
Nasdaq Chief Executive Robert Greifeld has contended that any U.S. antitrust issues from a Nasdaq-NYSE merger would be manageable.
The Nasdaq-ICE bid called for Nasdaq to buy stock exchanges in New York, Amsterdam, Brussels, Lisbon and Paris, as well as U.S. options platforms and technology. Atlanta-based ICE would buy NYSE Euronext's London-based Liffe interest-rate business.
Antitrust concerns and nationalism have emerged as tall hurdles for a handful of pending exchange mergers.
On Friday, Singapore Exchange Ltd ended a takeover bid for the exchange operator ASX Ltd after Australia's government rejected that offer.
In Friday trading on U.S. markets, NYSE Euronext shares closed at $38.70, Nasdaq OMX at $28.45 and ICE at $120.55. (Reporting by Jonathan Stempel, Editing by Gary Crosse and Gunna Dickson)