NASDAQ: NYSE Is Depriving Its Stockholders

The NASDAQ chief said today that the NYSE’s move to discard the NASDAQ offer breaches the rules of corporate governance that the NYSE espouses for companies it has listed on its exchanges

‘NYSE Euronext’s board of directors is depriving its stockholders of the benefits of a superior proposal, disregarding the fundamental corporate governance principles that it has espoused for the rest of corporate America,’ he says. ‘The feedback we have received from NYSE stockholders is very positive, and we would expect NYSE would, at the very least, meet with us and our advisers to discuss the merits of the proposed combination.’

On Sunday, the NYSE board of directors unanimously voted to reject a takeover offer from NASDAQ OMX and Atlanta-based ICE.  

The NYSE says its board decided to turn down the takeover bid, which was submitted earlier this month, because it was a ‘highly conditional proposal’ that would usher in ‘unacceptable execution risks’.

However, in response to this reason for not accepting the offer, NASDAQ claims that NYSE ‘failed to acknowledge the significant execution risk associated with the Deutsche Boerse proposal,’ which includes the significant rivalry issues that could surface from the proposed Deutsche Boerse/NYSE Euronext combination in Europe ‘given the dominance the resulting entity would have in the European derivatives market.’

‘By declining to meet with us, the NYSE Euronext Board is ignoring its obligations to its stockholders, which is surprising given the role that NYSE Euronext sets for issuers in establishing good corporate governance,’ claims Jeffrey Sprecher, chairman and CEO of ICE. ‘NASDAQ OMX and ICE would not have made this joint proposal without a high degree of confidence that our proposal is both superior for NYSE Euronext’s stockholders and capable of consummation. I would expect that NYSE Euronext’s stockholders will make their displeasure known to the board.’

ICE business in derivative trading has grown over the past year and the company foresees future growth.

Both ICE and Nasdaq says that they plan to meet with investors, customers and regulators to justify why their proposal stand as the best.  

‘The NYSE wants to go more international and that is the strategic focus of the merger,’ says Peter Bible, partner at accounting and advisory firm EisnerAmper. ‘NASDAQ’s bid would be great for shareholders but terrible for consumers, which is why the NYSE would have difficulty with antitrust laws. I think the NYSE board made the right decision.’

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