Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. said they are willing to pay NYSE Euronext $350 million if antitrust authorities block their proposed takeover, an offer they say is now based on “fully committed financing” of $3.8 billion.
The statements were included in a letter to NYSE Euronext’s board, which on April 10 rejected the unsolicited $11.3 billion proposal and affirmed its February agreement to merge with Deutsche Boerse AG for $9.5 billion in stock. The New York Stock Exchange owner’s agreement with Deutsche Boerse AG includes a payout of 250 million euros ($357 million) should their deal fall apart. Nasdaq OMX and ICE said they signed and received $3.8 billion in commitment letters from lenders.
NYSE Euronext’s board said it favored the Deutsche Boerse merger because the Nasdaq OMX-ICE bid would lead to too much debt and had “unacceptable” risks, including antitrust review. Both sides have been meeting with NYSE Euronext shareholders to convince them their deal is superior and discuss further financial incentives.
“We view the addition of the reverse break-up fee in the event we fail to obtain antitrust or competition law approvals as being a significant improvement to your proposed Deutsche Boerse transaction, as well as demonstrating our confidence that we can address any antitrust or competition issues,” Robert Greifeld and Jeffrey Sprecher, chief executive officers at Nasdaq OMX and ICE, wrote in the letter.
Greifeld and Sprecher said the proposal has the full support off their boards.
The so-called reverse breakup fee is designed to allay concerns that the U.S. government may reject a Nasdaq OMX-NYSE Euronext takeover because it would create a monopoly in stock listings. The Nasdaq OMX-ICE bid would break up NYSE Euronext, giving Atlanta-based ICE the Liffe derivatives markets and Nasdaq OMX, based in New York, the listings, equities and options businesses, saving costs on overlapping units and technologies.
Agreeing to the Nasdaq OMX-ICE proposal would “require shareholders to shoulder unacceptable execution risk,” NYSE Euronext’s board said in an April 10 statement affirming its commitment to Deutsche Boerse. Directors also cited concern the offer would entail too much debt and destroy its “human capital,” a reference to the firings it said would occur in the merger.
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