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Georges Ugeux Headshot

Does the NASDAQ-ICE bid on the NYSE Make Sense?

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You have to be Robert Greifeld, the Chairman and CEO of NASDAQ, to describe the offer as a move " to build a global exchange platform." This is indeed a transaction that reinforces the monopolistic position of two Exchanges inside the United States. But Mr. Greifeld is a man of bold moves, and I understand why he is trying: if he does not succeed, NASDAQ will be the next target of Hong Kong, Sao Paolo or another bidder.

Three key questions need to be addressed:

Is it good for shareholders? Clearly, one of the advantages of the NASDAQ-ICE offer is that a substantial part of it is in cash, while the Deutsche Boerse Offer is in shares. The 19% "premium" over the Deutsche Boerse however, is going to fluctuate until the closing of the day. The final pricing is far from being certain, and the question of a possible counter-offer of Deutsche Boerse is clearly open.

Is it good for investors and listed companies? The fact that there might be a single major listing and trading venue should not be good news for any of them. Listed companies enjoy the different requirements of the two exchanges and the competition between them. As to investors, facing a single regulated and dominant platform for their trading activities is a loss.

Is it good for The United States? At first sight, the fact that Deutsche Boerse bids for NYSE could appear as a national loss. But in the space where the NYSE operates, the cash market for equities, it remains the dominant US and global market, a position that is not threatened by the Deutsche Boerse offer. Optically and emotionally, however, it raises national reactions.

The added value of the NASDAQ ICE bid is not clear and we should avoid jumping to conclusions. Deutsche Boerse could therefore state that it was the "best combination for shareholders and stakeholders."

On both sides of the Atlantic, the antitrust authorities will have a view on the two offers. They might well be the decisive factor.