Meanwhile, Deutsche Börse published its plans for NYSE Euronext shareholders to tender their stock in return for shares in a new Dutch holding company.
Speaking as the exchange revealed its first quarter 2011 financial results, Sprecher ramped up his appeal to the target’s shareholders, accusing NYSE Euronext of favouring the Deutsche Börse deal, which he described as “full of empty promises”. A merger with the German group would lead to Liffe being “gutted”, he said.
In a conference call with analysts and media, Sprecher said ICE and Nasdaq OMX would submit a formal offer to NYSE Euronext shareholders within weeks, after filing it with the US Securities and Exchange Commission. The offer has been valued at around $11bn.
The offer would be rushed out “for us to show an alternative to the shareholders”, as a vote on the proposed deal with Deutsche Börse is scheduled within weeks.
ICE and Nasdaq have tried to persuade NYSE Euronext’s board to enter talks with them, but twice been rebuffed. NYSE Euronext’s board described the offer as an “empty vessel”.
The war of words has become increasingly heated – Sprecher has called NYSE’s stance “risky” and “absurd”. Nasdaq and ICE believe they should succeed because their cash and shares offer is worth more, based on current share prices. They have sought to defeat objections to their approach by matching the terms agreed with Deutsche Börse and offering to pay a $350m break fee if their bid is blocked by regulators, under certain circumstances.
Claims of risks to Liffe
Sprecher also sought to win favour by painting a bleak future for Liffe. “If the Deutsche Börse takeover proceeds,
He claimed that if Liffe’s European derivative markets came under the control of ICE – which would happen if Nasdaq and ICE carried out their plan to split NYSE Euronext between them – they would have a bright future.
Rejecting any suggestion that Nasdaq and ICE’s offer was simply a “spoiler” to disrupt their rivals’ plans, he said he had harboured ambitions to control Liffe for the last decade.
“Euronext management and ICE met on a number of occasions to discuss a Liffe and ICE combination to jointly leverage our strong London-based franchises,” Sprecher said. “It has consistently been my view that we could combine Liffe and ICE into a joint venture. This dialog continued after NYSE acquired Euronext Liffe, ending in mid-2010.”
Sprecher acknowledged that there was no way the two US exchanges could secure NYSE Euronext through a hostile takeover. “There is basically a pill in the NYSE charter that says, if you own 20% of the stock or more, they get to buy the stock back at basically a penny. So, no person including us or Nasdaq with that condition in place can ultimately take over the company,” Sprecher said. “But the board works for the shareholders and I would suspect that the board will get very realistic when it sees a vast majority of its shareholders not supporting the board’s deal and supporting another deal. The board is going to have to take a look at its position once it’s able to gauge the strength of our proposal in the hands of the shareholders and I think ultimately, it will work out just fine.”
ICE’s first quarter net profits totalled $129m, up from $119m in the same period last year. Transaction revenues have grown on the back of strong growth in futures trading, especially Brent and WTI crude, gasoil and carbon emission futures, which it said grew 28% year-on-year.
Consolidated revenues grew 19% to $334m. Futures transaction and clearing revenues grew 28% to $157m. Average daily futures trading was 1.6m contracts, up 24% from the same period of 2010.
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