Nasdaq mulls NYSE bid in exchange deal dash (Reuters)

NEW YORK/TORONTO (Reuters) – Nasdaq OMX Group Inc could launch a rival bid for NYSE Euronext to avoid being left on the sidelines, a source said, as traditional exchanges race to merge to see off upstart electronic rivals.

This is one option Nasdaq, valued at $5.7 billion, is considering as a spate of deals shakes up an industry under intense cost pressure from new entrants such as BATS Global Markets, which last week snapped up rival Chi-X.

Nasdaq's alternatives include tying up with IntercontinentalExchange Inc or the Chicago Mercantile Exchange (CME) to wrest NYSE from its planned $10.2 billion takeover by Deutsche Boerse, the source familiar with the matter said.

Meanwhile, Toronto market operator TMX Group Inc pressed the case for its agreed deal with London Stock Exchange, warning lawmakers opposing the tie up that Canada risked damaging its free-trade credentials if it blocked it.

TMX Chief Executive Thomas Kloet told Reuters he was taking political opposition to a deal "very seriously."

Even so, he said Canada was putting its reputation on free trade and competition on the line as it considers a proposal to create a transatlantic operator worth $7 billion in market value and the world's fifth-largest exchange ranked by trading volume.

"One of the things Canada has to make sure to consider as it goes through this is what if it says no," Kloet said.

Kloet's counterpart at the LSE, Xavier Rolet, told Reuters he saw some good support in Canada for the deal but expected "some tense moments" as the former British exchange monopoly positions itself for the next wave of mergers.

"In five years there'll be three, four international exchange groups with global distribution capabilities," Rolet told Reuters in an interview on Wednesday.

"The start of the second generation of consolidation in the exchange world is just that ... We're just getting started, guys.

Outside Canada, most attention has focused on merger talks between Deutsche Boerse and NYSE Euronext rather than LSE and TMX. The propose deal is drawing comparisons with CME, the world's biggest derivatives marketplace.

Shares in Deutsche Boerse fell 2.7 percent on Wednesday afternoon, with traders saying that the group's stock was coming under pressure from the NYSE deal. The German group's shares have sunk since the deal was announced.

NASDAQ VULNERABLE

Nasdaq focuses on intensely competitive, low-margin equities trading, so may feel vulnerable to more price-competitive exchanges that could result from the wave of merger plans.

The Wall Street Journal said Nasdaq might also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal. A Nasdaq spokesman was not available to comment.

NYSE Euronext and Deutsche Boerse dominate futures and options on European bonds, shares and rates, with Deutsche Boerse's Eurex unit focused on the long end of the interest rate curve and NYSE Euronext's Liffe unit on the short end.

The Deutsche Boerse-NYSE Euronext merger would give the combination annual trading volume exceeding $20 trillion. But to succeed it needs approval from a host of regulators.

The latest wave of consolidation was kicked off by a $7.9 billion bid by Singapore Exchange for the Australia stock exchange operator ASX Ltd late last year. A previous flurry ended with the financial crisis.

NO BIG ASIAN M&A

Asia runs the risk of being left behind in the sudden wave of transatlantic stock exchange consolidation, given its tough regulatory regimes, cumbersome ownership structures and protectionist minded governments.

Thailand's market regulator said that most of South East Asia's stock exchanges are several years away from getting involved in global bourse consolidation.

Exchanges in Malaysia, the Philippines, Singapore, Vietnam, Indonesia and Thailand are setting up electronic trading links between their markets with the eventual aim of having cross-border dealing in all their listed shares.

The exchanges of Southeast Asia, including Indonesia and Vietnam, have a combined capitalization of about $2.4 trillion and were the darlings of emerging market investors last year.

"Right now the only linkage is through the electronic means of this project, and that is the only likely option for now," Tirachai Phuvanatnaranubala, Secretary General of Thailand's Securities and Exchange Commission, told Reuters.

(Additional reporting by Luke Jeffs in London, Michael Erman and Rachel Armstrong in Singapore; Writing by Anshuman Daga and Alexander Smith; Editing by Neil Fullick, Jon Loades-Carter and Jane Merriman)

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Nasdaq mulls NYSE bid in exchange deal dash (Reuters)

NEW YORK/TORONTO (Reuters) – Nasdaq OMX Group Inc could launch a rival bid for NYSE Euronext to avoid being left on the sidelines, a source said, as traditional exchanges race to merge to see off upstart electronic rivals.
This is one option Nasdaq, valued at $5.7 billion, is considering as a spate of deals shakes up an industry under intense cost pressure from new entrants such as BATS Global Markets, which last week snapped up rival Chi-X.
Nasdaq's alternatives include tying up with IntercontinentalExchange Inc or the Chicago Mercantile Exchange (CME) to wrest NYSE from its planned $10.2 billion takeover by Deutsche Boerse, the source familiar with the matter said.
Meanwhile, Toronto market operator TMX Group Inc pressed the case for its agreed deal with London Stock Exchange, warning lawmakers opposing the tie up that Canada risked damaging its free-trade credentials if it blocked it.
TMX Chief Executive Thomas Kloet told Reuters he was taking political opposition to a deal "very seriously."
Even so, he said Canada was putting its reputation on free trade and competition on the line as it considers a proposal to create a transatlantic operator worth $7 billion in market value and the world's fifth-largest exchange ranked by trading volume.
"One of the things Canada has to make sure to consider as it goes through this is what if it says no," Kloet said.
Kloet's counterpart at the LSE, Xavier Rolet, told Reuters he saw some good support in Canada for the deal but expected "some tense moments" as the former British exchange monopoly positions itself for the next wave of mergers.
"In five years there'll be three, four international exchange groups with global distribution capabilities," Rolet told Reuters in an interview on Wednesday.
"The start of the second generation of consolidation in the exchange world is just that ... We're just getting started, guys.
Outside Canada, most attention has focused on merger talks between Deutsche Boerse and NYSE Euronext rather than LSE and TMX. The propose deal is drawing comparisons with CME, the world's biggest derivatives marketplace.
Shares in Deutsche Boerse fell 2.7 percent on Wednesday afternoon, with traders saying that the group's stock was coming under pressure from the NYSE deal. The German group's shares have sunk since the deal was announced.
NASDAQ VULNERABLE
Nasdaq focuses on intensely competitive, low-margin equities trading, so may feel vulnerable to more price-competitive exchanges that could result from the wave of merger plans.
The Wall Street Journal said Nasdaq might also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal. A Nasdaq spokesman was not available to comment.
NYSE Euronext and Deutsche Boerse dominate futures and options on European bonds, shares and rates, with Deutsche Boerse's Eurex unit focused on the long end of the interest rate curve and NYSE Euronext's Liffe unit on the short end.
The Deutsche Boerse-NYSE Euronext merger would give the combination annual trading volume exceeding $20 trillion. But to succeed it needs approval from a host of regulators.
The latest wave of consolidation was kicked off by a $7.9 billion bid by Singapore Exchange for the Australia stock exchange operator ASX Ltd late last year. A previous flurry ended with the financial crisis.
NO BIG ASIAN M&A
Asia runs the risk of being left behind in the sudden wave of transatlantic stock exchange consolidation, given its tough regulatory regimes, cumbersome ownership structures and protectionist minded governments.
Thailand's market regulator said that most of South East Asia's stock exchanges are several years away from getting involved in global bourse consolidation.
Exchanges in Malaysia, the Philippines, Singapore, Vietnam, Indonesia and Thailand are setting up electronic trading links between their markets with the eventual aim of having cross-border dealing in all their listed shares.
The exchanges of Southeast Asia, including Indonesia and Vietnam, have a combined capitalization of about $2.4 trillion and were the darlings of emerging market investors last year.
"Right now the only linkage is through the electronic means of this project, and that is the only likely option for now," Tirachai Phuvanatnaranubala, Secretary General of Thailand's Securities and Exchange Commission, told Reuters.
(Additional reporting by Luke Jeffs in London, Michael Erman and Rachel Armstrong in Singapore; Writing by Anshuman Daga and Alexander Smith; Editing by Neil Fullick, Jon Loades-Carter and Jane Merriman)
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Nasdaq weighs competing NYSE bid: source (Reuters)

NEW YORK (Reuters) – Nasdaq OMX Group Inc (NDAQ.O), left out of a global merger frenzy among exchanges, is exploring options that include teaming up with a partner on a rival bid for NYSE Euronext (NYX.PA) (NYX.N), a person familiar with the situation said on Tuesday.
The alternatives include the possibility of tying up with IntercontinentalExchange Inc (ICE.N) or CME Group Inc (CME.O) to wrest NYSE Euronext out of its deal with Deutsche Boerse (DB1Gn.DE), the person said.
Nasdaq may also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal, the Wall Street Journal said.
A Nasdaq spokesman was not immediately available to comment. The person familiar with the situation asked to remain anonymous because the talks are private.
Nasdaq has found itself to be the odd-man out in a series of exchange-operator deals in recent months.
Pressure is mounting on global bourses to seek partnerships to counter the threat from bigger rivals and alternative trading platforms, and to cut costs.
In recent weeks, Deutsche Boerse agreed to buy NYSE, the London Stock Exchange Group Plc (LSE.L) announced a deal to take over Canadian stock market operator TMX Group Inc (X.TO), and BATS Global Markets said it will buy peer Chi-X Europe.
Last October, Singapore Exchange agreed to buy Australia's ASX.
It is not clear where Nasdaq's efforts will lead, the person familiar said.
Indeed, officials at both ICE and CME have been cautious about potential deals.
Earlier this month ICE Chief Financial Officer Scott Hill said his exchange, which trades energy futures as well as over-the-counter swaps, sees "a lot of opportunity in the changes that are going on."
But he said ICE is "proceeding cautiously on the M&A side, because what we don't want to do is we don't want to acquire to build scale."
Officials at CME, which owns the Chicago Mercantile Exchange, have said they are not planning any large acquisitions and have promised to return excess cash to investors in the form of dividends or share buybacks.
The New York Times' Dealbook last week said Nasdaq and IntercontinentalExchange were in talks to team up on a possible bid for NYSE Euronext.
(Additional reporting by Michael Erman; Editing by Gary Hill and Muralikumar Anantharaman)
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Nasdaq, ICE eye tie-up to bid on NYSE: report (Reuters)

NEW YORK (Reuters) – Nasdaq OMX and IntercontinentalExchange are in talks to team up on a possible bid for NYSE Euronext, in an attempt to break up the Big Board's deal with Deutsche Boerse, the New York Times' Dealbook reported on Friday.

If such a bid were to materialize, Nasdaq could buy NYSE Euronext's cash equities trading business, while ICE would take the derivatives business, the Times reported, citing an unnamed source.

An offer is not imminent, the paper said, adding that the chances of such a bid emerging were low.

An ICE spokeswoman declined to comment. Nasdaq officials were not immediately available for comment.

(Reporting by Paritosh Bansal and Ann Saphir; Editing by Richard Chang)

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Nasdaq nears 10-year high; should you be nervous? (AP)

By DAVID K. RANDALL, AP Business Writer David K. Randall, Ap Business Writer – Sun Feb 20, 3:01 pm ET

NEW YORK – The Nasdaq finished within 25 points of its highest level in a decade Friday, reminding investors of a time many would rather forget: The bursting of the dot-com bubble.

Today, tech is hot again. Facebook — which hasn't even gone public yet — is worth some $50 billion. Online content company Demand Media rose 33 percent on the day of its initial public offering last month. The Nasdaq composite index closed Friday at 2,834, still only a little more than half its all-time closing high of 5,049 in March 2000. But the index of mostly tech stocks is up 26 percent over the past 12 months.

Should investors be worried about another bubble? Not really, because there's a twist this time around: Technology companies are making money and may valued correctly.

"It is night and day compared to 10 years ago," says Barry Mills, the manager of the $400 million Dreyfus Technology Growth fund. "These business models are real. The revenues are real, and the cash flows are real."

Consider this: Judging by diluted earnings per share, a conservative method of valuing what a company's stocks are worth, the companies in the Nasdaq index were collectively earning $39.28 per share in December 1999 and priced at 103.6 times their annual earnings. Now, the index has diluted earnings per share of $127.64 and a price-earnings ratio of 22.11.

The economic recovery in the U.S. is one reason that technology companies are earning such high profits. Companies put off upgrading their computer systems and other large purchases during the worst days of the recession, and are making up for that now. Others are investing in new technology before they add employees.

International growth is another reason to be optimistic. Half of the profits of the technology companies in the Standard & Poor's 500 index come from outside North America, says Bill Stone, chief investment strategist at PNC Asset Management. China is now the world's second-largest market for PCs, and consumers in emerging market countries are showing strong demand for smart phones.

Technology companies in the S&P 500, a close proxy for the Nasdaq composite, are up 8.4 percent so far this year, about 2 percentage points more than the index as a whole. Last year, tech companies returned 10 percent after dividends, compared with the 15 percent return of the full index.

And tech stocks as a whole may be doing better than index returns show. That's because large companies — with the exception of Apple — that were hot stocks 10 years ago have matured and their stocks have stalled. "The Microsofts, Yahoos, and Googles of the world aren't growing like they used to," says Michael Sansoterra, manager of the $510 million RidgeWorth Large Cap Growth fund.

Bigger companies have a larger weighting in the Nasdaq index than smaller ones. Microsoft, for instance, makes up 5.6 percent of the index. The company has fallen 6.6 percent over the past 12 months.

And now to the question on the mind of any investor who was once burned by a bubble: Is it too late to get in?

Stock valuations certainly don't suggest so. Tech stocks in the S&P 500 are priced at 13.3 times earnings, which is just 0.3 more than the broad index. Not only that, but they are cheaper than they were a year ago, when they cost 15.4 times earnings. With stocks trading at reasonable levels, it's harder to make an epic mistake. Such as, say, buying technology stocks in June 2001, when they cost 128.3 times earnings.

"I'm still finding a lot of good values out there," says Samuel Dedio, manager of the $108 million Artio U.S. Smallcap fund. "There looks to be a lot more upside ahead of this."

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NYT: Nasdaq OMX and ICE talk possible bid for NYSE (AP)

NEW YORK – The New York Times is reporting that market operators Nasdaq OMX and InterContinental Exchange are discussing forming a partnership to bid for NYSE Euronext.

The Times cited a person briefed on the matter. That unnamed person told the Times that an offer may not emerge for several weeks. The person also cautioned that there is a low probability of a bid. Representatives from Nasdaq OMX Group Inc. and InterContinental Exchange Inc. didn't immediately respond to messages seeking comment.

Deutsche Boerse, the owner of the Frankfurt stock exchange, said on Tuesday that it will buy NYSE Euronext Inc., the parent of the New York Stock Exchange in a deal that values it at $10 billion.

A Deutsche Boerse-NYSE combination would put pressure on other exchange operators to grow to compete.

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