Nasdaq and partner make rival NYSE bid

(Bloomberg) - Deutsche Boerse AG slumped in Frankfurt trading after Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. trumped the Frankfurt Stock Exchange operator's bid for NYSE Euronext with a rival offer.

Nasdaq and ICE bid $42.50 in cash and stock for each NYSE Euronext share, or about $11.3 billion, according to a statement released Friday. That is more than the $9.53 billion value of Deutsche Boerse's all-stock offer on Feb. 15. The shares slid as much as 3.1%, and traded down 99 cents, or 1.9%, in Frankfort afternoon trading. NYSE surged 11% in early New York trading.

Deutsche Boerse, by taking over NYSE Euronext, aims to create the world's largest operator of stock and derivatives exchanges. Nasdaq and IntercontinentalExchange's offer may force the German company to increase its bid to seal a deal or risk coming out empty-handed, said Thilo Mueller, a portfolio manager at MB Fund Advisory GmbH in Limburg.

“The counter bid, should it be successful, raises the question of strategic perspectives for Deutsche Boerse in the future,” said Mr. Mueller, who manages $170 million in assets. “The bid makes alternatives for Deutsche Boerse more difficult. Nasdaq and ICE benefit from being in a consortium, and it certainly makes things more expensive for Deutsche Boerse.”

Deutsche Boerse, in a statement, said it continues to “strongly believe that the envisaged merger of Deutsche Boerse AG and NYSE Euronext is the best possible combination for both shareholder groups.”

Exchanges have announced more than $20 billion of exchange acquisitions in the past five months as venues in North America, Europe and Asia try to cut costs and offset declining profits from equity trading with options, futures and derivatives.

NYSE Euronext was formed when the operator of the New York Stock Exchange bought Europe's second-largest exchange in 2007. It now owns exchanges in Amsterdam, Lisbon, Paris and Brussels, as well as London-based Liffe, Europe's second-largest derivatives market.

The company also runs three U.S. stock exchanges: NYSE Arca, NYSE Amex and the New York Stock Exchange, two options platforms and the NYSE Liffe U.S. futures exchange, which will trade contracts linked to interest rates.