By Diane Bartz
WASHINGTON, May 16 (Reuters) - Nasdaq OMX was quickly schooled in merger reviews when antitrust enforcers dismissed its bid for NYSE Euronext as a textbook merger-to-monopoly deal.
Nasdaq Chief Executive Robert Greifeld said on Monday the company was 'surprised and disappointed' with the regulators' decision as Nasdaq and partner Intercontinental Exchange Inc announced they were withdrawing their $11.3 billion bid for NYSE Euronext.
Antitrust experts, however, expected just this outcome, saying it was dead on arrival at the U.S. Justice Department's doors this spring.
'It was evident at the time that this was a gigantic reach,' said antitrust expert Stephen Axinn of the law firm Axinn, Veltrop and Harkrider LLP.
Nasdaq and ICE abandoned the offer for NYSE, leaving it to German rival Deutsche Boerse AG with a $9.9 billion offer, after the Justice Department said it would file a lawsuit to block the all-U.S. deal.
If it had gone through, American companies planning an initial public offering would have had only one choice of places to list their shares, instead of the two they now have.
'The New York Stock Exchange and Nasdaq compete aggressively for company listings,' said Christine Varney, head of the Justice Department's Antitrust Division. 'Virtually every Fortune 500 publicly traded company is listed on one of these two exchanges.'
'The proposal was a two-to-one merger to monopoly,' she added.
Greifeld said in a statement that Nasdaq and ICE had offered 'substantial remedies' that made the deal appealing to shareholders and to U.S. competitiveness.
Varney disagreed. 'It was highly unlikely that it (the deal) could be remedied,' she told reporters.
Deutsche Bourse made its offer for NYSE Euronext in February. Nasdaq and ICE started making noise soon after that they were also interested. But it wasn't until April 1 that it made a rival bid which NYSE Euronext rejected as too risky.
Antitrust experts said the Nasdaq/ICE deal was deeply troubled from the start, and that it was quite possible the companies knew it.
'I think they were just trying to force Deutsche Bourse to raise its bid,' said Axinn.
'STUFF TO SHOOT AT'
The swift smackdown comes as the Justice Department undertakes more antitrust reviews due to increased merger activity.
Varney, who has been head of the antitrust division for two years, has appeared as a dealmaker because of the Justice Department's controversial approvals of Ticketmaster's buy of Live Nation in 2010 and Google's buy of ticketing software company ITA last month.
More recently, there have been a spate of challenges.
The department said last week it would challenge credit card swipe machine maker VeriFone Systems' buy of smaller rival Hypercom.
The Justice Department also filed suit last week to stop a small chicken company from buying a slaughter complex from Tyson Foods.
But these challenges do not indicate philosophical changes at the department, experts say.
'A lot of the things that she's been able to compromise on have been vertical deals, things that would be a complex transaction,' said Bruce McDonald, a former Justice Department official now with the Jones Day law firm. 'Those provide more opportunities for a fix.'
McDonald argued that it took longer for this antitrust division to 'hit its stride' because the lagging U.S. economy stifled deal making.
'Now there's stuff to shoot at so they're shooting,' he said.
(Reporting by Diane Bartz; Editing by Tim Dobbyn) Keywords: NASDAQ ICE/ANTITRUST (diane.bartz@thomsonreuters.com; + 1 202 898 8313; Reuters Messaging: diane.bartz.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, May 16 (Reuters) - Nasdaq OMX was quickly schooled in merger reviews when antitrust enforcers dismissed its bid for NYSE Euronext as a textbook merger-to-monopoly deal.
Nasdaq Chief Executive Robert Greifeld said on Monday the company was 'surprised and disappointed' with the regulators' decision as Nasdaq and partner Intercontinental Exchange Inc announced they were withdrawing their $11.3 billion bid for NYSE Euronext.
Antitrust experts, however, expected just this outcome, saying it was dead on arrival at the U.S. Justice Department's doors this spring.
'It was evident at the time that this was a gigantic reach,' said antitrust expert Stephen Axinn of the law firm Axinn, Veltrop and Harkrider LLP.
Nasdaq and ICE abandoned the offer for NYSE, leaving it to German rival Deutsche Boerse AG with a $9.9 billion offer, after the Justice Department said it would file a lawsuit to block the all-U.S. deal.
If it had gone through, American companies planning an initial public offering would have had only one choice of places to list their shares, instead of the two they now have.
'The New York Stock Exchange and Nasdaq compete aggressively for company listings,' said Christine Varney, head of the Justice Department's Antitrust Division. 'Virtually every Fortune 500 publicly traded company is listed on one of these two exchanges.'
'The proposal was a two-to-one merger to monopoly,' she added.
Greifeld said in a statement that Nasdaq and ICE had offered 'substantial remedies' that made the deal appealing to shareholders and to U.S. competitiveness.
Varney disagreed. 'It was highly unlikely that it (the deal) could be remedied,' she told reporters.
Deutsche Bourse made its offer for NYSE Euronext in February. Nasdaq and ICE started making noise soon after that they were also interested. But it wasn't until April 1 that it made a rival bid which NYSE Euronext rejected as too risky.
Antitrust experts said the Nasdaq/ICE deal was deeply troubled from the start, and that it was quite possible the companies knew it.
'I think they were just trying to force Deutsche Bourse to raise its bid,' said Axinn.
'STUFF TO SHOOT AT'
The swift smackdown comes as the Justice Department undertakes more antitrust reviews due to increased merger activity.
Varney, who has been head of the antitrust division for two years, has appeared as a dealmaker because of the Justice Department's controversial approvals of Ticketmaster's buy of Live Nation in 2010 and Google's buy of ticketing software company ITA last month.
More recently, there have been a spate of challenges.
The department said last week it would challenge credit card swipe machine maker VeriFone Systems' buy of smaller rival Hypercom.
The Justice Department also filed suit last week to stop a small chicken company from buying a slaughter complex from Tyson Foods.
But these challenges do not indicate philosophical changes at the department, experts say.
'A lot of the things that she's been able to compromise on have been vertical deals, things that would be a complex transaction,' said Bruce McDonald, a former Justice Department official now with the Jones Day law firm. 'Those provide more opportunities for a fix.'
McDonald argued that it took longer for this antitrust division to 'hit its stride' because the lagging U.S. economy stifled deal making.
'Now there's stuff to shoot at so they're shooting,' he said.
(Reporting by Diane Bartz; Editing by Tim Dobbyn) Keywords: NASDAQ ICE/ANTITRUST (diane.bartz@thomsonreuters.com; + 1 202 898 8313; Reuters Messaging: diane.bartz.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.