Nasdaq, ICE withdraw NYSE bid, cite regulators

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Nasdaq OMX Group Inc and IntercontinentalExchange withdrew their hostile $11.3 billion bid for rival NYSE Euronext on Monday, citing opposition from U.S. antitrust regulators.

The withdrawal of the offer removes a major hurdle to NYSE Euronext's plans to sell itself to Deutsche Boerse AG for $9.9 billion.

The deal with Deutsche Boerse must still win regulatory and shareholder approval in Europe and the United States, but investors said the odds of the merger going through now had improved substantially.

"To me, it's a clear signal that Deutsche Boerse's offer will go ahead," said fund manager Juergen Meyer of SEB Asset Management, which owns Deutsche Boerse shares. "That's what I'm expecting, actually."

In a statement, the U.S. Justice Department said that if the Nasdaq-ICE bid had not been abandoned, it would have filed a lawsuit to stop it.

NYSE shares fell 10.4 percent while Deutsche Boerse rose 4.1 percent after news of the Nasdaq-ICE decision. NYSE shares were trading at $36.65, closer to the implied $37.79 per share price in the Deutsche Boerse deal.

Nasdaq was up 1 percent and ICE was up 5.8 percent.

The withdrawal of the Nasdaq-ICE bid leaves Nasdaq searching for its next move. It could look at deals with other exchanges such as Singapore Exchange or London Stock Exchange Group.

"They need to continue to run a strong operation. They also need to keep their eyes on the horizon for any strategic opportunities." said Keith Wirtz, chief investment officer at Fifth Third Asset Management, which has $18 billion in assets and owns more than 60,000 Nasdaq shares.

Nasdaq needs to pursue deals that would provide growth, including in Asian markets and derivatives products, Wirtz said.

"They need to make sure they have their capital war chest prepared," he added.

In a statement, Nasdaq CEO Bob Greifeld said his company was "surprised and disappointed" with the decision by U.S. Justice Department antitrust regulators.

Greifeld said it became clear that regulators would not give the go-ahead for a deal despite Nasdaq and ICE offering a variety of remedies to address antitrust concerns.

Combining Nasdaq and the NYSE would have brought together the top two U.S. stock exchanges, creating a virtual monopoly on listings and dominance in trading U.S. cash equities and options.

The Justice Department, in its statement, said, "The acquisition would have substantially eliminated competition for corporate stock listing services, opening and closing stock auction services, off-exchange stock trade reporting services, and real-time proprietary equity data products."

Other deals struck in the recent global exchanges consolidation frenzy have also run into trouble over national-interest or regulatory concerns.

Singapore Exchange last month had to abandon its deal with Australia's main exchange after it was rejected on national-interest grounds.
 
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