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Published: Sunday, 4/10/2011

NYSE rejects Nasdaq takeover bid

ASSOCIATED PRESS
The trading floor of the New York Stock Exchange. The trading floor of the New York Stock Exchange.
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NEW YORK — The parent company of the New York Stock Exchange said Sunday that it rejected an $11.3-billion bid from Nasdaq and IntercontinentalExchange to buy the company.

NYSE Euronext said that its board decided to turn down the offer, which was submitted earlier this month, because it was “highly conditional” and would have caused unnecessary risk for shareholders.

The company said it is sticking with its plan to combine with German exchange operator Deutsche Boerse AG. NYSE agreed to that $10 billion deal in February.

The rejection of the Nasdaq/ICE bid was expected. Analysts have said that a deal between the companies would have led to more job losses. They also worried that a combination would raise antitrust concerns in Washington if Nasdaq and NYSE created one big U.S. stock market exchange.

NYSE said the Deutsche Boerse deal creates more value for investors and is “significantly more likely to close.” Deutsche Boerse issued a statement saying the combination with NYSE would “create compelling value for shareholders of both companies.”

Officials with Nasdaq OMX Group and IntercontinentalExchange Inc. did not immediately return phone calls seeking comments.

Under its proposal, Nasdaq said it would take over the NYSE’s stock trading and options business, while IntercontinentalExchange would get its derivatives market. ICE trades commodities including oil, sugar, coffee and cotton.

It’s also a market for derivatives such as credit default swaps that are used by traders and investors to offset risk in other investments.

The proposed merger of Deutsche Boerse and NYSE Euronext would create the world’s largest stock exchange operator. The company would be incorporated in the Netherlands, although it would have headquarters in New York and Frankfurt. NYSE chief executive Duncan L. Niederauer would be expected to become CEO of the combined company, while Deutsche Boerse’ CEO Reto Francioni would be chairman.

Stock exchanges have turned to mergers as the trading of stocks, options and other investments has become increasingly competitive. Technology has driven down the costs of trading, and newer companies like BATS Exchange and Direct Edge have taken away business from established players like NYSE and Nasdaq. That’s forced them to look for deals to ensure their survival.



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