NASDAQ OMX (NDAQ) and IntercontinentalExchange (ICE) today issued the following letter to NYSE Euronext stockholders:
What's the Rush?
-- Why are NYSE Euronext stockholders being asked to approve a high-risk, low-value transaction without all of the facts?
-- Why is your board rushing you into a vote?
-- And why are they refusing to even meet with NASDAQ OMX and ICE to explore a clearly financially superior alternative?
Stockholders of NYSE Euronext who own shares as of today will be eligible to vote on the proposed Deutsche Boerse transaction. But both NYSE Euronext and Deutsche Boerse have made clear in public filings and interviews that they are not expected to have definitive information regarding their EU competition status until year-end or later. Yet your Board has set the stockholder meeting date for approval of the combination for July 7th, 2011 .
Dominique Cerutti told reporters in Brussels that it could take "maybe twelve" months, or until March 2012 , to win EU regulatory approval. ( Dominique Cerutti , deputy CEO of NYSE Euronext , Bloomberg , "NYSE Deputy Chief Expects 'Intense' Deutsche Boerse Review," February 22, 2011 .)
Furthermore, NYSE Euronext's CEO has publicly admitted that there are significant regulatory challenges facing the proposed Deutsche Boerse transaction.
"I think both deals have some risk attendant to it . . . there's no question about it. I think on our side it's obvious that if you look at what the envisioned Newco would be, we certainly have a lot of work to do with the competition authorities in Brussels ...." ( Duncan Niederauer , CEO of NYSE Euronext , CNBC Interview, April 11, 2011 .)
As a stockholder of NYSE Euronext , you won't know on July 7th whether regulatory approvals for the Deutsche Boerse transaction can be obtained or, even if obtained, the conditions or remedies regulators may require in order for the transaction to close, which may reduce the value of the combined organization. But if the proposed Deutsche Boerse transaction is approved by stockholders, it would be impossible to consider our financially superior proposal.
What you know today, however, is that without any engagement with NASDAQ OMX and ICE on their financially superior proposal, your Board has rushed to judgment without making available all of the facts that you, the ultimate owners of NYSE Euronext , require in order to make an informed decision. NYSE Euronext's actions reflect corporate governance at its worst and falls far short of the governance standards they recommend for listed companies.
NYSE Euronext's website states under the governance section:
"To best serve its stockholders… NYSE Euronext has created a governance structure that reflects the highest standards of independence, oversight and transparency. We are committed to leading by example, and serving as a model for our industry…"
You, the stockholders to whom this statement refers, have the right to be asking why, in spite of the clear superiority of the proposal that NASDAQ OMX and ICE have made to acquire NYSE Euronext , Jan-Michiel Hessels and your Board are stonewalling us by refusing to even meet, and are instead trying to force through an uncertain transaction that is worth $1 billion less to NYSE stockholders.
The ICE/NASDAQ Proposal Is Superior
- Based on May 5, 2011 prices, the value of the NASDAQ OMX /ICE offer is $1 billion greater, or $4.10 more per share than the proposed Deutsche Boerse transaction.
- NYSE Euronext management has already cost stockholders over $1 billion because they only "found" $100 million in "new" synergies after the Deutsche Boerse transaction was negotiated. Are these synergies real, and should you own more than 40% of their value?
- NASDAQ OMX and ICE have requested access to NYSE Euronext financial information, consistent with the opportunity allowed to Deutsche Boerse in finalizing their agreement, in order to affirm the benefits of our proposal to you as stockholders.
- Our proposal also goes further to protect the NYSE Euronext stockholders than the proposed Deutsche Boerse transaction by offering a $350 million reverse breakup fee in the event we fail to obtain antitrust approvals. The fee underlines the belief we have in the compelling nature of our proposal, the confidence we have in our ability to deal with any regulatory concerns and to provide reassurance of the seriousness of our proposal. The proposed Deutsche Boerse transaction offers no break-up fee if antitrust approvals are not received.
- NASDAQ OMX and ICE have worked to advance their own competition reviews as expeditiously as possible. Faced with a year-long review and serious competition issues in Europe for the proposed Deutsche Boerse transaction, NYSE Euronext stockholders are being asked to take a leap of faith by voting for the proposed Deutsche Boerse transaction on July 7th .
- NYSE Euronext management's claims of execution risk on our proposal are a red herring. Our companies have a proven infrastructure and management teams, and the two businesses to be split up (LIFFE and the cash equities business) already operate independently.
- ICE and NASDAQ OMX are faster-growing companies than Deutsche Boerse , with better-performing share prices and much more successful track records of integrating acquisitions.
So what's the rush …?
- NYSE Euronext management is attempting to divert attention from its own challenging regulatory approvals by rushing you through the stockholder approval process — all while refusing even to discuss with us the regulatory approvals they cited in summarily rejecting our proposal.
- The NYSE Euronext proxy statement with respect to the proposed Deutsche Boerse transaction notes that "regulatory conditions may not be satisfied until months after expiration of the offer," and its own executives have signaled that it may take until March 31, 2012 to obtain these approvals.
- NYSE Euronext and Deutsche Boerse do not expect to obtain affirmative EU approvals — which when and if obtained may come with unknown conditions — until months after the scheduled date of the stockholder meeting. This for a transaction the NYSE Euronext CEO has admitted faces regulatory challenges in Europe !
The NYSE Euronext Board has rushed to its own judgment without a willingness to consider the facts available to them — don't let them railroad you into the clearly inferior Deutsche Boerse transaction without all the information you need in order to make an informed decision as the ultimate owners of NYSE Euronext. Demand of your Board that they meet with us, and at the same time ask them, "What's the rush?"
Additional Details
Other supporting information related to this proposal are available on http://www.nasdaq.com/deal and http://ir.theice.com