UPDATE 6-Nasdaq, ICE in bold counterbid for NYSE

* Cash and stock bid valued at about $11.3 billion

* Offer is 19 percent premium over Deutsche Boerse bid

* NYSE Euronext shares up 11 pct; could spark bidding war
(Rewrites first paragraph, adds proposed name and other deal
details, comments, background on mergers frenzy, additional

By Lauren Tara LaCapra and Jonathan Spicer

NEW YORK, April 1 (Reuters) – Nasdaq OMX (NDAQ.O: Quote, Profile, Research) and
IntercontinentalExchange (ICE.N: Quote, Profile, Research) bid $11.3 billion for NYSE
Euronext (NYX.N: Quote, Profile, Research) in a politically charged effort to trump
Deutsche Boerse’s friendly deal to acquire the New York Stock

The counterbid, unveiled on Friday in an appeal to U.S.
patriotism, would redraw the world’s capital markets so that
Americans have a stronger hand than Europeans, just as
exchange operators globally maneuver to come out on top.

The move presents U.S. lawmakers and regulators with a
dilemma: whether to allow a German exchange to take control of
the venerable New York Stock Exchange, or to allow the
creation of a dominant American-run platform with massive
market power.

The new offer is valued at $42.50 per share, Nasdaq and
ICE said. The offer represents a 19 percent premium to NYSE’s
closing price on Thursday and is 27 percent above the
company’s valuation before Deutsche Boerse’s (DB1Gn.DE: Quote, Profile, Research) $10.2
billion bid in February. It would give NYSE shareholders cash
and stock.

Antitrust questions surround the agreement by Nasdaq and
ICE to split up NYSE Euronext. The pair were left out of a
recent merger frenzy capped by Deutsche Boerse’s $10.2 billion
deal for the Big Board parent.

Bringing Nasdaq and NYSE Euronext together would create a
stock-trading powerhouse in the United States and Europe that
would also dominate the business of listing U.S. public
companies, and dwarf other U.S. options markets. It would be
called NASDAQ NYSE Euronext.

Nasdaq Chief Executive Robert Greifeld, for years a fierce
cross-town rival of NYSE’s Duncan Niederauer, and ICE’s
Jeffrey Sprecher appealed heavily to U.S. patriotism, the
country’s thirst for new listings, and need for a more stable

“It will create two nimble, forward-looking,
entrepreneurial, global exchanges,” Greifeld said on a call
with analysts and media, adding later NYSE’s surprise decision
to sell out to the German boerse “represented an unplanned-for

Sprecher said: “The U.S. can change its current course” if
the deal succeeds.


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Already, the Deutsche Boerse bid was expected to attract
intense regulatory scrutiny as the merged company would have a
lock on European derivatives trading and clearing. The
counter-bid shifts the antitrust focus to whether one entity
should have a lock on U.S. listings.

Deutsche Boerse’s bid had also stirred some political
backlash from some lawmakers who opposed the idea of a foreign
company taking over the symbolic centerpiece of Wall Street
and U.S. capitalism.

Under the proposal, ICE would purchase many of NYSE’s
valuable derivatives business — including the London-based
LIFFE platform, seen as a profitable gem — while Nasdaq would
acquire its stock exchanges, U.S. options businesses and
technology suite.

“It’s quite a bold move from Nasdaq and ICE. Certainly I
think the premium they’re paying is quite high,” said Karl
Morris, an analyst at Keefe Bruyette & Woods in London. “It
makes you wonder what Deutsche Boerse is going to do about
this and I struggle to see how they can lift their bid to

Some details of how a deal would work have not yet been
worked out. Nasdaq Chief Executive Robert Greifeld said on a
conference call that the management and the board of directors
have not yet been determined, and that he hasn’t spoken to
Niederauer or others on the NYSE management team.

But a group of banks led by Bank of America and Wells
Fargo is prepared to arrange $3.8 billion of financing for the
cash portion of the deal, Nasdaq and ICE said.

NYSE shares jumped about 11.1 percent to $39.08, while
Deutsche Boerse shares were down 1 percent in Frankfurt.
Nasdaq shares rose 3.6 percent to $26.77 and ICE shares
slipped 3.7 percent to $118.92 in morning trade.


NYSE’s shares were trading more than 5 percent higher than
the current implied value of the Big Board under Deutsche
Boerse’s deal. But they were still 7 percent below the
Nasdaq-ICE offer price, which would indicate investors are yet
not entirely convinced the Nasdaq bid would succeed.

The calclulations are based on 261.2 million NYSE shares
and 195 million Deutsche Boerse shares outstanding, according
to Thomson Reuters data.

Deutsche Boerse said it “continues to strongly believe
that the envisaged merger of Deutsche Boerse AG and NYSE
Euronext is the best possible combination for both shareholder
groups and the stakeholders of the companies.”

For now, Deutsche Boerse is studying the offer and relying
on Nasdaq shareholders and U.S. regulators to scrutinize the
deal before deciding its next move, a person familiar with
Deutsche Boerse’s thinking said on Friday.

NYSE Euronext said its board would “carefully review” the
new offer and urged shareholders not to take any action
pending its review. A source said there was some “shock” that
the cash portion of the counterbid was so small.

Greifeld and Sprecher have mixed deal-making records.

Their unusual partnership and counterbid comes amid an
expected wave of tie-ups in the increasingly competitive and
global exchange business, where companies are linking up and
pushing into derivatives to survive and grow.

In LIFFE, Sprecher would get an interest-rate business
that eluded him when ICE’s bid for the Chicago Board of Trade
failed four years ago.

For Nasdaq, the deal would expand its core, albeit
low-margin, stock-trading business, and could raise questions
for shareholders well aware that the other exchange deals are
driven largely by a need to diversify into more profitable
derivatives trading.

In a flurry in February, Deutsche Boerse agreed to buy
NYSE, the London Stock Exchange Group Plc (LSE.L: Quote, Profile, Research) announced a
deal to take over Canadian market operator TMX Group Inc
(X.TO: Quote, Profile, Research). Late last year, Singapore Stock Exchange bid for
Australia’s ASX Ltd (ASX.AX: Quote, Profile, Research).

When Deutsche Boerse unveiled its bid for NYSE, CEO Reto
Francioni acknowledged that “we have a bumpy road ahead of
us.” Observers say his career hinges on winning NYSE.

Under the counter-bid, NYSE shareholders would receive
$14.24 in cash plus 0.4069 of a share of Nasdaq stock.

Under the Deutsche Boerse proposal, which still awaits
approval by shareholders and regulators, each share of NYSE
Euronext stock would be exchanged for 0.47 share of the
combined company’s stock.

Nasdaq and ICE said that within 12 to 18 months, the
combined franchise would provide “double-digit accretion” to
shareholders and save $740 million in operating costs per

The deal outlined by Deutsche Boerse would deliver $5.4
billion in total combined revenue and $400 million cost
savings and immediately add to adjusted earnings for
shareholders, according to those companies.

Bank of America Merrill Lynch and Evercore Partners are
advising Nasdaq, while Lazard, Broadhaven Capital Partners,
and BMO Capital Markets Corp are advising ICE.
(Additional reporting by Edward Taylor in Frankfurt and
Jonathan Stempel in New York, editing by Dave Zimmerman)

UPDATE 6-Nasdaq, ICE in bold counterbid for NYSE