Nasdaq OMX Group and Deutsche Boerse are wooing major NYSE Euronext shareholders, as both exchanges stand by their bids for the Big Board parent and dig in for a drawn-out battle.

Nasdaq and partner IntercontinentalExchange Inc were unbowed on Monday after NYSE Euronext's board rejected their takeover offer in favor of a lower bid from Deutsche Boerse.

Shareholders at the center of the increasingly bitter fight were bracing for a bidding war and weighing a stark choice: The short-term gain from Nasdaq's higher but probably riskier offer or leaving cash on the table for what could be a better long-term fit with Deutsche Boerse.

While Nasdaq and ICE would carve NYSE Euronext in two, the Deutsche Boerse combination would create the world's top exchange operator. The rival plans face considerable antitrust hurdles in the United States or Europe, complicating things for shareholders.

It is really early on in this contest. There's lots of time for mischief, said Thomas Caldwell, chairman and founder of Toronto-based Caldwell Investment Management Ltd.

Nasdaq and ICE are not about to walk away from their $11.3 billion unsolicited offer, and they are working behind the scenes to persuade NYSE shareholders to pressure the exchange's directors, according to people familiar with the matter.

Deutsche Boerse, which in February struck a $10 billion friendly deal to acquire NYSE Euronext, has no plans to raise its offer, two other sources said. On Sunday, NYSE's board rejected the Nasdaq-ICE bid as strategically unattractive, with unacceptable execution risk.

The maneuvering points to a lengthy and public fight for the parent company of the venerable New York Stock Exchange, which also runs stock and futures markets across Europe.

Some shareholders suggested Nasdaq and ICE first need to counter the NYSE board's unanimous and harshly worded rejection of its offer, before they consider raising it.

There is also a relatively steep 250 million euro ($361 million) termination fee attached to the Deutsche Boerse-NYSE Euronext plan.

The NYSE has taken the first step, and that is casting doubt. Nasdaq has got to convince people that this combined NYSE-Nasdaq combo is going to be a real winner and a powerhouse, said Caldwell, who with the funds his firm manages holds more than $100 million in NYSE Euronext stock.

NYSE Euronext is the biggest of the takeover targets now in play as many of the world's exchanges, including the London Stock Exchange and Canada's TMX Group, look to band together.


After the rejection, Nasdaq and ICE reaffirmed their bid and chided NYSE for not discussing it further with them.

They are now trying to influence an annual meeting on April 28 in which NYSE shareholders are set to vote on their directors, said one of the sources, who requested anonymity. They hope institutional shareholders can convince the NYSE board to talk to them about the offer.

In response, NYSE Euronext Chief Executive Duncan Niederauer and his Deutsche Boerse counterpart, Reto Francioni, are set to meet key NYSE shareholders this week to promote their plan and to specify its expected cost savings, a person familiar with the plan said.

The CEOs plan to emphasize problems with the bid from Nasdaq and ICE, including concerns over too much leverage, a listings monopoly and likely job cuts, said the source.

Niederauer -- who has not talked to his counterparts at Nasdaq and ICE since they first informed him of their offer on April 1 -- on Sunday called the bid hollow and undefined.

Though NYSE's board argued the all-share Deutsche Boerse tie-up jibes with the company's long-term plan, others argue the higher cash-and-stock bid from Nasdaq and ICE could sway shareholders focusing on a short-term gain.

We don't think many investors will find the differences in strategic vision, financial leverage, employment targets, etc, as sufficient reasons to decline the nominally superior Nasdaq ICE offer, Macquarie analyst Edward Ditmire wrote in a note.

That offer would give NYSE Euronext's stock, options and technology businesses to Nasdaq, while ICE would get its profitable derivatives operations centered in London.

Amid the frenzy, Deutsche Boerse is preparing to file an offer document with regulator BaFin as early as Tuesday, said the two people familiar with the company's thinking.

Deutsche Boerse shares rose on Monday as investors saw the chances of a bidding war between rival suitors diminish. The stock was up 0.9 percent in Frankfurt.

NYSE Euronext shares fell 2.9 percent and Nasdaq OMX shares slipped 1.5 percent, handing back some of the big gains they made when Nasdaq announced its bid.

(Additional reporting by Edward Taylor, Hakan Ersen, Harro Ten Wolde and Anika Ross in Frankfurt; Writing by Jonathan Spicer; Editing by Matthew Lewis, Steve Orlofsky and Tim Dobbyn)