Talk Over NYSE Acquisition HEATS UP Ahead Of Shareholder Meeting

The battle for control of NYSE Euronext spun into a volley of competing claims and counterclaims over the weekend and yesterday, as each side tried to frame the arguments in its favour and a query from a US senator about job losses in New York from anticipated ‘synergy savings’ spiced up the debate. 

As a backdrop to the drama, the Big Board is preparing for its annual meeting of shareholders and earnings conference call this Thursday, which will be widely watched for signals of investor sentiment.

In an online video interview with the Financial Times aired over the weekend, NYSE Euronext chief executive Duncan Niederauer took his case for the proposed merger with Deutsche Börse directly to the two audiences key to making the deal go through: shareholders and the European Union competition authorities.

Niederauer revealed that he expects to find an additional €100 mn ($146 mn) in synergy cost savings on top of the €300 mn originally projected, as well as $133 mn in revenue synergies, which adds up to about $717 mn in deal synergies and is closer to the $740 mn number projected by the NASDAQ OMX/IntercontinentalExchange (ICE) proposal.

Niederauer also pointed to nearly $1.5 bn in dividends that shareholders can expect over the next year based on current payouts at both NYSE and Deutsche Börse, assuming the merger is approved. 

‘When you get right down to it, the deals aren’t really that different,’ Niederauer argued. ‘But we’ll see how the shareholders react next week when I give the details.’

In a message seemingly aimed at the European Union competition authorities, he also told the FT that large institutional customers would see $3 bn in savings by integrating NYSE’s and Deutsche Börse’s European derivatives platforms. 

He said that conversations with EU authorities indicate they are most concerned about pricing issues and he does not anticipate the need for divestitures. ‘All we are asking is Europe being consistent with the rest of the world’ in regulating derivatives trading markets, he said. 

‘We’d support whatever decision the competition authorities make,’ he added. ‘I don’t think there’s anything that rises to the level of a deal breaker.’

In response, NASDAQ OMX and ICE issued a joint statement Monday saying investors should be ‘highly sceptical’ of the increased synergy savings Niederauer identified. 

‘The discovery that initial synergies have been understated by one third comes after receiving a superior proposal from NASDAQ OMX and ICE that achieves greater synergies,’ the statement says. 

The statement also questions ‘the credibility of these revised estimates, particularly in light of commitments to retain two technology platforms and two headquarters. Increasingly it appears that NYSE Euronext is more focused on protecting the transaction than its stockholders.’

Enter US senator Charles Schumer who late Monday reportedly sent a letter to NASDAQ OMX and ICE for details on what their synergy savings would mean for US employees of the NYSE. 

At Schumer’s request, NYSE has already provided an estimate of 1,000 to 1,100 US job cuts if the combination with NASDAQ OMX and ICE went through, reports the Wall Street Journal.

‘This would be a major consideration in judging any potential transaction,’ Schumer reportedly wrote in a letter to NASDAQ OMX and ICE management. He said their job-loss estimates should come before any further bids for NYSE Euronext, according to the WSJ.