NYSE Euronext’s shareholders told Chief Executive Officer Duncan Niederauer that they’re not getting enough compensation from his merger agreement with Deutsche Boerse AG.
While owners re-elected all NYSE Euronext directors with “well over 80 percent” support at the exchange operator’s annual meeting today, Niederauer and Chairman Jan-Michiel Hessels said they haven’t met with Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. because their unsolicited joint bid isn’t legitimate.
“Their request for a meeting is tactic principally designed to be disruptive,” Hessels said. “Our offer has real value and is executable. Nasdaq-ICE is an empty vessel. It looks nice, but there is nothing in there.”
Speaking to a half-full room of about 100 people at the New York Stock Exchange in downtown Manhattan, Niederauer told holders they should vote July 7 for Frankfurt-based Deutsche Boerse’s $38.55-a-share agreement to purchase the company. The offer from Nasdaq OMX and ICE is valued at $42.73, or 11 percent more, as of 10:37 a.m. New York time.
Robert Greifeld and Jeffrey Sprecher, the CEOs of New York- based Nasdaq OMX and ICE of Atlanta, have met with shareholders since announcing their bid on April 1, which NYSE Euronext’s board has twice rejected. Bill Miller, the chief investment officer of Legg Mason Capital Management Inc. in Baltimore, said yesterday that the refusal to meet is inconsistent with Niederauer’s obligations.
“It is in the shareholders’ interest that the board work to maximize value for owners,” Miller, whose mutual-fund company is the fifth-biggest NYSE Euronext holder with 7.48 million shares, said in an e-mailed statement to Bloomberg News yesterday. “We don’t see how being unwilling to meet with Nasdaq furthers that goal.”
Directors “appear as if they are protecting their deal rather than acting in the best interest of their shareholders,” Greifeld said in an April 21 statement.
NYSE Euronext’s five biggest owners as of Dec. 31 — T. Rowe Price Group Inc., BlackRock Inc., State Street Corp., Vanguard Group Inc. and Legg Mason Inc. — controlled 22 percent of the company’s stock, according to data compiled by ISS Proxy Advisory Services, the shareholder advisory unit of New York- based MSCI Inc. At today’s meeting, shareholders also approved a proposal giving two or more owners with stakes totaling 10 percent the right to call special meetings.
“Neither of these deals is without risk,” Ian McDonald, a Baltimore-based U.S. exchanges analyst at T. Rowe Price, said on April 10. The “spread between the offers seems quite large even if it was obvious that one deal was riskier than the other. Shareholders can’t and hopefully won’t ignore that.”
Heather McDonold, a spokeswoman for T. Rowe Price in Baltimore, Alicia Curran of Boston-based State Street, and Jim Marren of New York-based BlackRock declined to comment yesterday. John Woerth of Vanguard in Valley Forge, Pennsylvania, didn’t respond to an e-mail message.
“If I were competing with us, I’d want to disrupt this, too,” Niederauer said today of Nasdaq OMX and ICE’s attempt to snatch NYSE Euronext away from Deutsche Boerse.
Deutsche Boerse and NYSE Euronext plan to combine into a Dutch holding company, with each Deutsche Boerse share swapped for one share of the new corporation. NYSE Euronext owners would get 0.47 share for each of their shares. Niederauer warned that raising the ratio might result in Deutsche Boerse shareholders rejecting the deal.
“Let’s not be penny-wise and pound-foolish,” Niederauer said today. “We would hate to miss out on the accelerating opportunity because we just got a touch too greedy on the ratio.”
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