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May 15, 2011

NASDAQ drops the ball on NYSE Euronext takeover bid

NASDAQ and ICE abandon proposed $11 bn bid to acquire rival NYSE Euronext

NASDAQ and IntercontinentalExchange (ICE) announced today that they are abandoning their proposed $11 bn bid to acquire rival NYSE Euronext. This comes in the wake of discussions with US antitrust officials who said the firms would not be granted regulatory approval for the merger, NASDAQ says.

'We took the decision to withdraw our offer when it became clear that we would not be successful in securing regulatory approval for our proposal despite offering a variety of substantial remedies, including the sale of the NYSE SRO and related businesses,' NASDAQ OMX chief executive Bob Greifeld notes.

If successful, the deal would have split NYSE Euronext into two. NASDAQ would have acquired NYSE's equities and its options business, and ICE would have purchased its London-based futures unit.

The takeover saga
Earlier this month, NASDAQ and ICE jointly announced that each board member had already approved a cash and stock transaction to purchase the outstanding shares of NYSE Euronext for nearly $11 bn.

In April, the NYSE moved to reject the NASDAQ offer, which the NYSE says breaches the rules of corporate governance it espouses for companies it has listed on its exchanges.

As the smoke started billowing around this takeover bid, NASDAQ returned to the discussion table with a ‘superior proposal.’ NASDAQ and ICE jointly strengthened their initial proposal by addressing perceived regulatory risks that might arise from the transaction, offering commitments on financing and including a breakup fee.

Following that move, the joint bidders said they were frustrated at being rebuffed by NYSE's board over their superior offer and would take their bid directly to the exchange’s shareholders.

In response to the latest development, Greifeld says his company is ‘surprised and disappointed’ with the US government's decision.

The NYSE says it has acknowledged the withdrawal of the proposal from NASDAQ and ICE and now looks forward to its July 7 vote.

Aarti Maharaj

Aarti is deputy editor of IR magazine's sister publication, Corporate Secretary.