* NYSE's warnings made an impression on some shareholders
* Nasdaq's Greifeld needs to make strong antitrust case
* Shareholders centerstage as CEOs push rival deals
* Deutsche Boerse, Nasdaq, ICE all want a piece of NYSE
* 'It could get extremely nasty' -Caldwell
By Jonathan Spicer
NEW YORK, April 12 NYSE Euronext's NYX.N
shareholders seem skeptical that Nasdaq OMX Group (NDAQ.O) and
IntercontinentalExchange Inc (ICE.N) could really buy the
exchange operator, interviews this week revealed.
Three of the five shareholders that spoke to Reuters said
face-to-face meetings with exchange executives could sway them
as they weigh the Big Board's friendly merger agreement with
Germany's Deutsche Boerse (DB1Gn.DE) against an unsolicited,
higher bid from Nasdaq and ICE.
NYSE said on Sunday that it was sticking with Deutsche
Boerse's deal, because the ICE/Nasdaq bid was too risky. Nasdaq
and ICE executives have spoken to NYSE shareholders about their
offer, which they believe is superior.
Though both deals face considerable antitrust hurdles, most
hedge funds and other institutions zeroed in on what could kill
Nasdaq's planned tie-up with the NYSE, stressing Nasdaq CEO
Robert Greifeld needs to make a strong case he can overcome a
tough regulatory review.
"The second bid (from ICE and Nasdaq) is interesting
because it's higher, but it's uncertain what's going to occur
there," said Daniel Coleman, co-manager of the Edge Equity
Income Fund and head of equities at Seattle-based Edge Asset
Management, which holds more than $45 million in NYSE Euronext
Capping a wave of merger plans among the world's exchanges,
Deutsche Boerse agreed in February to acquire the New York
Stock Exchange parent for $10.2 billion in stock to create the
world's largest market operator.
Nasdaq and ICE made their $11.3-billion cash-and-stock bid
this month, proposing to carve NYSE Euronext in two, and
appealing to U.S. patriotism to make their case. The offer is a
12 percent premium to that of Deutsche Boerse.
Nine days later, NYSE's board unanimously dismissed that
bid as too risky, arguing regulators would block a merger of
the top two U.S. exchanges, and highlighting the risky debt
levels Nasdaq would take on. [ID:nN10204369]
"You're getting cash, and you're also getting two pieces of
paper (stocks) with lots of debt -- it may not be paper that
you really want," said Coleman. "That may not be a superior
investment over the next three to five years."
Greifeld and his counterparts at NYSE Euronext and Deutsche
Boerse, Duncan Niederauer and Reto Francioni, have all hit the
road to meet NYSE shareholders, who are expected to vote on the
German tie-up in July. A source familiar with NYSE's thinking
called it a "reset week" that's meant to reassure investors.
"Nasdaq's ability to demonstrate they can get the deal done
is going to be important for shareholders to vote down the
Deutsche Boerse deal," said a hedge fund manager who requested
anonymity because of the sensitivity of meetings with the
"Deutsche Boerse is under pressure too -- people aren't
necessarily going to be crazily supportive of that deal when
there's a better deal on the table, knowing that there's
regulatory risk for both," he said.
"There's still a lot left to be played in this soap opera."
Most shareholders who spoke to Reuters said a bidding war
was unlikely in the short term, jibing with ICE CEO Jeffrey
Sprecher's assertion on Tuesday that there's no reason to boost
his bid because it is already superior. [ID:nN12136285]
Nor does Deutsche Boerse have plans to raise its offer,
people familiar with the exchange's thinking said on Monday.
Yet some expect the battle for NYSE Euronext -- which runs
stock and futures bourses in the United States and across
Europe -- to grow increasingly personal as egos clash and as
takeover strategies change on the fly.
"It could get extremely nasty," said Thomas Caldwell,
chairman and founder of Toronto-based Caldwell Investment
Management, who with his firm holds more than $100 million in
Greifeld, a sharp cost-cutter and technology expert, and
Sprecher, a shrewd entrepreneur with close ties to Wall Street,
respectively built Nasdaq and ICE on a series of acquisitions.
Niederauer, the former co-head of equities at Goldman Sachs
Group Inc (GS.N) who is slated run the combined Deutsche
Boerse-NYSE Euronext, would be widely expected to leave if
cross-town rival Greifeld succeeds in buying his company.
"Both Sprecher and Greifeld have failed in some takeovers,
and all I can tell you is that I've learned more from my
failures than from my successes," Caldwell said. "They're very
tough and they're not going to let it go, and Greifeld is a
very determined person in this matter."
Institutional investors with an eye on short term gains
could favor the offer from Nasdaq and ICE, while those with an
eye on the horizon could favor Deutsche Boerse, some
"As a shareholder I am looking for the best possible
outcome and all potentially viable offers should be thoroughly
evaluated," said another shareholder who asked not to be
"The NYSE is a very good and unique asset for a number of
global exchange players. I think a sale of NYSE has the
potential to be extremely competitive."
(Reporting by Jonathan Spicer, additional reporting by Ann
Saphir in Chicago, editing by Bernard Orr)