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NYSE board rejects Nasdaq, endorses Deutsche Börse bid

German exchange group Deutsche Börse appears to be on track to merge with NYSE Euronext after the US company's board rejected a higher, unsolicited takeover bid from Nasdaq OMX and IntercontinentalExchange.

New York Stock Exchange on Wall Street

NYSE Euronext operates the New York Stock Exchange

Shares in Deutsche Börse rose more than 1 percent on Monday morning after NYSE Euronext reaffirmed a merger deal with the German exchange, snubbing a higher offer from a US group and decreasing the chances of a trans-Atlantic bidding war.

On Sunday, NYSE Euronext's board of directors unanimously rejected the $11.3 billion (7.8 billion euro) counter-offer from Nasdaq OMX and IntercontinentalExchange (ICE), saying it was too risky and did not fit the group's vision.

"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," the board said in a statement.

When Deutsche Börse unveiled its plan to acquire NYSE Euronext for about $9.6 billion in stock in February, NYSE Euronext chief executive Duncan Niederauer described the agreement as a "merger of equals."

The Nasdaq MarketSite shown in New York's Times Square

Nasdaq may try to convince NYSE Euronext shareholders the German bid is too low

Not over yet

Christian Muschick at Silvia Quandt research said Sunday's announcement increased the chances of a successful NYSE Euronext Deutsche Börse merger, but added that Nasdaq ICE may still directly approach shareholders and go hostile.

"We will continue meeting with investors, customers and regulators to highlight the many ways in which our proposal is superior, not only for the stockholders of NYSE Euronext, but also for market participants in the US and Europe, which would benefit from a more efficient and competitive marketplace," said Jeffrey Sprecher, Chairman and Chief Executive Officer of ICE,

Any merger involving NYSE Euronext would face intense scrutiny from antitrust authorities.

The proposal tabled by Nasdaq-ICE would create a virtual monopoly on listings and dominate trading of US cash equities and options. Similarly, a tie-up with Deutsche Börse would likely dominate European derivatives trading and clearing.

Author: Sam Edmonds (Reuters, AFP)
Editor: John Blau

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