White knight on the cheap

21 May 2006

The US exchange has positioned itself smartly for exchange consolidation. While its rival, Nasdaq, is paying out heaps of cash for LSE, it may get Euronext without paying a premium.

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The New York Stock Exchange has made a nilpremium bid for Euronext, countering a proposal from Deutsche Boerse.

Euronext's board will meet on Monday afternoon to consider the two proposals ahead of Tuesday's annual general meeting. A group of investors, headed by hedge funds TCI and Atticus have tabled a motion calling on Euronext to enter into exclusive talks with Deutsche Boerse.

NYSE is offering 0.98 of its own shares for each Euronext share and E21.32 in cash. At Friday's closing price for NYSE shares of $64.50 (E50.50) that would value each Euronext share at E70.82.

Euronext investors also get to keep an ordinary dividend of E1 a share and an alreadyannounced special dividend of E3 a share. In total that makes E74.82 a share – roughly in line with Friday's close of E74.50.

NYSE said its proposal would lead to $375m (E293m) in cost savings. Analysts said these were greater than the E250m of savings expected from a Deutsche Boerse tieup.

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