The sweetened bid from Nasdaq OMX Group and the IntercontinentalExchange for NYSE Euronext is even better than it looked when the group announced their $3.8 billion in "committed" financing earlier this week. In reality, Nasdaq assembled a total of $5.1 billion, which includes an additional cushion to pay for the Big Board's debt.
NYSE currently has $750m and EUR 1 billion in debt that would need to be paid back if the new company fell below investment-grade. Given that Nasdaq has a triple-B rating, and NYSE is rated single-A, the very fact of their merger could trigger a downgrade.
Credit rating agencies Moody’s and Standard & Poor’s had revised Nasdaq’s credit outlook to “negative” on its offer, while NYSE Euronext’s outlook had been revised to “positive” on its agreed deal with Deutsche Borse.
The Nasdaq package includes a $2.1 billion bridge loan. a $2.25 billion term loan, and a $750 million revolving credit facility. Leading this charge are Bank of America Merrill Lynch, UBS, SEB Enskilda and Nordea, relationship banks from Nasdaq's $3.7 billion acquisition of the OMX Group in 2007.
The deal financing is structured and priced in line with other investment-grade acquisition packages. Both Nasdaq and ICE are paying commitment fees in order to secure the financing, but those fees are minimal and expected to step up, should NYSE choose to engage them.
ICE's role in the fight is to buy the derivatives platform, it's raised $1.6 billion from Bank of America Merrill Lynch and Wells Fargo to do that according to the deal memo.
The entire deal would value NYSE Euronext shares north of $42 apiece, or $11 billion. The new offer from Nasdaq OMX and ICE, unveiled Monday, also includes a $350 million break-up fee, should an agreed deal get scuttled.
The competing deal from Deutsche Borse is structured all in stock, valuing NYSE at around $9.3 billion, around $36 per share, but subject to swings in the Euro and its own stock price.
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