Merger Talks between Nasdaq OMX and ICE?
Sunday, February 20th, 2011
The reports that have surfaced regarding a possible merger between the Nasdaq OMX Group and IntercontinentalExchange Inc. (ICE) now indicate that the deal is less likely to go through, but that a mutual bid for the NYSE Euronext is still possible.
The possible sticking point for the deal is the fact that this would open ICE to being subject to regulations imposed by the Securities Exchange Commission. This is an obvious disincentive for ICE to participate in the bid. If the Nasdaq and ICE decide to go through with it, they would need to come up with about $11 billion to purchase the NYSE Euronext from Deutsche Börse. This past Friday NYSE Euronext rose by 2.2 percent to $37.79, making the market value of the company $9.86 billion.
Other antitrust concerns make the deal less likely, as the Nasdaq would not be prevented from taking on the NYSE’s stock listings. Sources say the pair may file a lawsuit challenging the allegedly excessive $340 million break up fee that was included in the Deutsche Börse-NYSE Euronext merger.
In the next five to seven days, Nasdaq and ICE will make a determination whether the acquisition will go through. Under the terms released from the discussions between the exchanges, Nasdaq is expected to take over NYSE Euronext’s cash equities, including the Big Board. Indications from analysts have stated that if the deal to wrest NYSE Euronext from Deutsche Börse does not go through, the Nasdaq would be left vulnerable.
The apparent spike in interest in stock exchange mergers has largely been to do with concerns over the changing nature of modern finance. Traditional stock exchange companies are increasingly vying for size, scale, and most importantly, access to international markets. The companies actions are catalyzed by the recent swell of start up exchanges on the internet, as well as the high demand for international trading capabilities.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: deutsch boerse , ice , merger , mutual bid , nasdaq , nyse euronext
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