As officials of the New York Stock Exchange and Euronext touted their revolutionary US$9.96 billion union on Friday, rival bidder Deutsche Boerse AG said it had no intention of abandoning its pursuit of Euronext and its four European stock exchanges.
Issuing a statement even as NYSE Group Inc CEO John Thain and Euronext chairman Jan-Michiel Hessels held a news conference to explain their deal, Deutsche Boerse reiterated that its bid, which Euronext executives advised shareholders against, was a good offer.
The NYSE agreed on Thursday to buy Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon exchanges, for US$9.96 billion in cash and stock. Deutsche Boerse has not released terms of its bid, but analysts have estimated it to be worth around US$11 billion. It is believed the bid would require the combined company to carry more debt than the NYSE offer.
Deutsche Boerse's persistence reflected the drive among stock exchanges to consolidate and extend their reach.
A marriage between the NYSE and Euronext would handle a staggering US$2.1 trillion in stock trades each month and boast a market value of about US$20 billion.
NYSE and Euronext officials stood by their deal to form NYSE Euronext.
"We are fine with the New York Stock Exchange, we are committed to do this deal," Hessels said when asked about Deutsche Boerse's intentions. "We're obliged to listen to anything that makes sense or adds value."
"But, again, we have signed and are committed," said Hessels, who would chair the combined company.
Thain, who would remain chief executive of the exchange, denied there would be a bidding war for Euronext. He said that US hedge fund Atticus Capital -- a major shareholder in Euronext -- continued to back the NYSE deal over Deutsche Boerse's offer.
"That shareholder is the biggest shareholder of the New York Stock Exchange and is one of the biggest in Euronext," Thain said. "This is a very significant shareholder who says this transaction makes sense to them."
Atticus controls a roughly 9 percent stake in Euronext, 6 percent in NYSE, and 5 percent in Deutsche Boerse.
Another big shareholder, London-based hedge fund TCI Funds Management, favored the German bid. TCI said it would not comment on the NYSE-Euronext deal Friday. TCI holds 10 percent in Euronext and also holds 10 percent in Deutsche Boerse.
Analysts believed it would be hard for Deutsche Boerse to thwart the NYSE-Euronext deal.
"At the moment, Deutsche Boerse is the loser and today is Black Friday for them," said Wolfgang Gerke, a professor of banking and finance at the University of Nuremberg and Erlangen.
"It's quite difficult for Deutsche Boerse, because they were used to the position of opening doors," he said.
The NYSE-Euronext deal could turn world markets upside down, spurring mass consolidations, threatening the future of open-outcry trading and perhaps even opening the way for a round-the-clock worldwide exchange. The acquisition would create a single platform where traders could deal in stocks, options, futures, commodities and corporate bonds across two continents -- for up to 12 hours daily.
The latest turns in the fight for Euronext are part of a flurry of stock exchange merger proposals that began in March, when the NASDAQ Stock Market Inc made a US$4.5 billion bid for London Stock Exchange Plc (LSE). After the offer was rebuffed, the NASDAQ acquired more than 25 percent of the LSE, prompting Euronext to end its long-running interest in the British exchange.
Deutsche Boerse has failed on several occasions in recent years to acquire the LSE, and has said it will look for deals in the United States and Asia if its bid for Euronext collapses.
Analyst Juergen Kurz, of DSW, a German group that represents shareholders, said the deal could end up marginalizing the company and reduce its chances of "remaining a really big player."
The German government insisted on Friday that Deutsche Boerse made "an exceptionally attractive offer," spokesman Thomas Steg said in Berlin. He said the government considers it more sensible to create alliances of European exchanges.
Under the proposal, each NYSE share would be converted into one share of common stock of the new combined company NYSE Euronext. Holders of Euronext ordinary shares would be offered the right to exchange each of their shares for 0.98 share of NYSE Euronext stock and US$27.42 in cash.
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