Nasdaq bid: buy America, by Americans?

Make Money Blog$;While US Treasury officials and Senators, including New York's own representatives, were quibbling about what to call the entity that would result from a merger between the New York Stock Exchange and the Deutsche Boerse, Nasdaq President Robert Greifeld was busy making some plans of his own.

As I pointed out last month in my column, "Keep the New York Stock Exchange American," while the rest of the media was busy pooh-poohing other suitors, we expected some price discovery to come along. How could the largest auction exchange not solicit other bids for itself?

So Friday morning's Nasdaq and ICE joint cash and stock bid of $42.50 per share -- a 19 percent premium over the German offer -- was no surprise.

Under the proposed $11.3 billion merger, ICE would buy NYSE's futures and derivatives business and Nasdaq would retain the remaining businesses.

Nasdaq and ICE already have a financing commitment of $3.8 billion from US banks in place.

There is no question that if they choose to get into a bidding war with Berlin, there is plenty of money that they can tap via the debt and equity markets.

Yes, there is a breakup fee of $350 million with the German exchange and also some rich golden parachutes for executives, but that brings us to our next point.

While the $350 million could easily be engulfed, isn't it a bit large, considering there was no competitive process here?

There is nothing more investor-unfriendly than obscene breakup fees and golden parachutes. If someone is willing to pay a higher price for a company, to its shareholders, its rightful owners, why should they also have to pay a massive breakup fee?

There have been whispers that an American suitor for the NYSE would face tough anti-trust scrutiny. It wouldn't be the first deal to have a Federal Trade Commission review nor the last.

In the end, selling our primary exchange to a foreign-controlled entity is a lot less desirable than possibly divesting a few business lines or making some concessions.

Combining Nasdaq and the NYSE makes sense on many levels. It's good for shareholders and it's good for our country.

If someone wants to keep the crown jewel of American finance in US hands, then they deserve a parade down the canyon of heroes.

source: nypost.com/

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