NYSE Euronext’s speedy rejection of a bid from Nasdaq OMX Group Inc and IntercontinentalExchange Inc could play into their hands, a veteran of the last bidding war for a U.S. exchange said.
NYSE Euronext CEO Duncan Neiderauer let just nine days pass before rejecting the takeover offer, valued at about $1 billion more than Niederauer’s current deal with Germany’s Deutsche Boerse AG.
Nasdaq’s Robert Greifeld and ICE’s Jeffrey Sprecher are now wooing NYSE shareholders, trying to build a groundswell of support for their offer.
“The fact remains that the bid was over a billion dollars higher,” said Erika Olson, a managing director at the Chicago Board of Trade when it received a rival bid from ICE that topped CBOT’s existing deal with CME Group Inc (CME.O) by about the same amount.
CBOT executives spent two months weighing that offer, meeting with their counterparts at ICE and trading documents, said Olson, who participated in some of those exchanges.
Niederauer — who has not talked to his counterparts at Nasdaq and ICE since they first informed him of their offer on April 1 — on Sunday called the bid hollow and undefined.
“The big difference, with the Board of Trade, was that two full months went by before there was a formal thanks but no thanks,” Olson said in an interview, noting that, even after all the due diligence, there was plenty of skepticism from Board of Trade shareholders over whether management had taken the rival bid seriously enough.
“At some point shareholders will have to ask, is he looking out for us, or is he hell bent on his golden parachute and his animosity for Nasdaq?” Olson said, referring to Neiderauer. “I feel like those wheels are already turning.”
Sprecher, speaking in Rio de Janeiro on Tuesday, said both Nasdaq and ICE have received an “excellent response” from NYSE shareholders.
“We continue to talk to shareholders and, ultimately, they will decide,” he said. “There’s a continuing shareholder dialogue.”
Sprecher said he and Greifeld have no plans to boost their bid “because it’s a superior offer.
ICE ultimately lost its bid to take over the CBOT, but only after the CME boosted its initial offer by several billion dollars to satisfy a prominent CBOT shareholder opposed to the CME deal. The shareholder, who ran Australia-based hedge fund Caledonia, reversed his vote after the CME raised its price and called on his fellow shareholders to join him.
That might be the kind of leverage ICE and Nasdaq are seeking, said Olson, who gave an insider’s account of the ICE-CME bidding war in her book, Zero-Sum Game.
“They will try to find, or maybe they have already found, some sort of power base, like a Caledonia, that people listen to and follow,” she said.
Two weeks after the CBOT’s rejection, ICE was back with a better bid, enhanced this time by a deal with the Chicago Board Options Exchange that resolved a legal dispute that had been a thorn in CBOT’s side for years. Sprecher, Olson said, had been working on that part of the deal from day one, seeking out CBOE chief William Brodsky just an hour after delivering his offer to CBOT Chairman Charles Carey.
“Part of me is thinking, is there something else that they’ve got in their back pocket that could come out later?” Olson said. “I don’t believe they would put themselves in this situation without being really serious about it and knowing they have some other tricks up their sleeve.”
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