Nasdaq CEO Robert Greifeld is meeting with hedge funds Friday in New York trying to drum up support for his company’s proposal to purchase the NYSE. Nasdaq is joined in that proposal by its partner ICE, but today’s meeting did not include representatives from that company, something noted by attendees.
The central subject of conversation, people who attended the meeting tell me, was whether the Nasdaq can garner antitrust approval to merge its U.S. listings business with that of the NYSE and on that subject, attendees seem to have come away less than convinced.
Greifeld told hedge funds that on the subject of antitrust he hopes to have a sense within five weeks as to what remedies the Department of Justice will be asking for regarding any NYSE/NASDAQ merger.
If Nasdaq is able to deal with those potential remedies, investors hope that Nasdaq will then make its bid a real one by moving to a hostile exchange offer with a significant reverse break up fee.
The question, of course, continues to be whether the DOJ would ever allow the only two major players in the U.S. listings business to get together. While Nasdaq can argue there is a global listings market that creates competition and smaller U.S. players that do the same, the NYSE and its board continue to believe that is a fantasy.
In fact, I’m told that roughly one year ago the NYSE spent significant time considering whether to approach the Nasdaq about buying it and did not move ahead with that approach after concluding there was no way the deal could be approved.
The NYSE’s management and advisors appear to be growing increasingly frustrated with the perception held by others that a deal could happen, arguing that if Nasdaq and ICE were serious they would submit a fully financed bid that included a large reverse beak up fee to compensate NYSE shareholders for taking on the risk of antitrust.
As for the hedge funds in today’s meetings … few have taken on the large positions in NYSE stock that Nasdaq would like to see as it keeps seeking their support.
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