There are only a few independent financial exchanges left standing relative to 30 years ago. First we had regional consolidation within each country. Today we are in the midst of a second round of exchange consolidation within the U.S. This time the world famous NYSE is up for grabs.I believe that ultimately NYSE will be bought out for the following reasons:
1)The top 10 institutional investors holding the company such as T.Rowe Price, State Street, Vanguard etc etc own 30.55% of the firm as of Dec 31, 2010. I find it highly unlikely that the portfolio managers at these firms would agree to Deutsche Boerse’s lower bid when a higher bid exists
2) Nasdaq has the financial slack to raise the cash component of its offer even higher
3) Numerous shareholder lawsuits were filed against the NYSE after it agreed to be bought by D.Boerse. These suits claim that management has not maximized shareholder value because it has not shopped the firm around. Additionally, they claim that the offer price is lower than the high range of wall street analysts’ target prices and that management is not getting full value for the firm
3) Nasdaq and ICE’s group of financial advisors include more “boutique type” banks. These banks have been moving up the deal tables and would definitely like to close a large and prestigious transaction such as this one. It will only add to their rankings and continue to make them look better than the traditional BBs.
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