Nasdaq OMX executives said on Wednesday that the company and its partner, the IntercontinentalExchange, were committed to pursuing NYSE Euronext through next April — and would take their $11.1 billion takeover bid directly to the Big Board’s shareholders if necessary.
Nasdaq Says It May Take Its NYSE Bid to Investors
ReplyDeleteBy Michael J. de la Merced
Nasdaq OMX executives said on Wednesday that the company and its partner, the IntercontinentalExchange, were committed to pursuing NYSE Euronext through next April — and would take their $11.1 billion takeover bid directly to the Big Board’s shareholders if necessary.
The comments came as Nasdaq OMX reported a 70 percent rise in first-quarter earnings, offering a rejoinder to the fears that the takeover was too expensive and would weigh down its operations. The company earned $104 million, or 57 cents a share, up from $61 million, or 28 cents, a year earlier. Revenue, excluding rebates and fees, rose 15 percent, to $415 million.
Robert Greifeld, the chief executive, said that among the quarter’s highlights was the strong performance of Nasdaq’s core cash equities trading unit. Mr. Greifeld said the business — characterized by some analysts as commoditized and lower margin — had been outperforming the flashier derivatives trading franchises of some competitors.
Nasdaq has argued that the takeover, which would give it NYSE Euronext’s stock-trading business and give ICE the derivatives operations, would create two strong, concentrated companies. By contrast, it has said, a merger with Deutsche Börse would create a muddled “financial supermarket.”
Yet on Nasdaq’s investor call, analysts seemed more preoccupied with the latest specifics of the company’s NYSE Euronext bid, prompting Mr. Greifeld to joke that the good news was being obscured.
“The first thing I have to say, Howard, is I thought you would ask about the quarter,” he told Howard Chen of Credit Suisse.
All the same, Mr. Greifeld was happy to give some details on the bid. He said that Nasdaq and ICE had been providing the Justice Department “reams of data” to expedite antitrust approval. The company intends to begin the process in the near term.
Nasdaq officials argued that their main task was to show the Justice Department that combining the two biggest American stock exchanges would not create a monopoly. Mr. Greifeld again pressed the argument that the Securities and Exchange Commission would prevent a combined Nasdaq-NYSE Euronext from gouging customers on listings fees.
“The D.O.J. has to understand that we’re highly regulated,” he said. “What’s that mean? It’s really akin to the regulatory environment of a utility.”
The rise of listings in other areas may also help Nasdaq’s argument, Mr. Greifeld said, noting that on one day when company officials were meeting with Justice Department staff members, Glencore International, the Swiss-based commodities producer and trader, formally announced that it would go public in a $12 billion offering in London and Hong Kong.
“That was helpful,” he dryly noted.
Mr. Greifeld also reiterated that Nasdaq was committed to pursuing NYSE Euronext for the long term, or at least through next April. The company’s lenders have committed to providing the financing for a year.
Ronald Hassen, Nasdaq’s interim chief financial officer, said that while the exact terms of the loans depended on market conditions, the interest rate was expected to be about 2 to 2.25 percent above the London interbank offered rate.
“We’re obviously happy with that rate,” Mr. Greifeld said.
He added that while he was still optimistic that NYSE Euronext’s board would at some point agree to sit down for talks, Nasdaq was prepared to take the final step of going straight to the Big Board’s investors.
“It is not the outcome that we want,” he said. “It is not the outcome that we expect.”