Was $8.2 billion sale to IntercontinentalExchange Inc (NYSE:ICE) too low-NYX

The New Jersey carpenter pension fund has filed a lawsuit in New York Supreme court in Manhattan alleging the sale of NYSE Euronext (NYSE:NYX) to Inter Continental Exchange  Inc. (NYSE: ICE ) an Atlanta based exchange, where the pension fund holds the shares of NYSE. The deal was struck at $8.2 billion. The main point of the argument filed by the pension fund is that the deal is less valuable and that NYSE stock was worth much more than that. Also it is stated that the deal will not benefit the shareholders in any way. A similar case has been filed by the individual Samuel Cohen against NYSE with the same charges as the former site.

The deal was struck at the offer price of $33.12 per share of NYSE on Thursday (20th December 2012) which is 28% higher than the closing price on Wednesday. Points of the argument are:

  1. The fund argues that the deal terms are in favor of ICE
  2. It will benefit the chairman (Jan-Michiel Hessels) of NYSE and few other board members.
  3. The deal is not considered valuable on the part of ICE and might reduce the stake of Euronext European stock market by making it public.
  4. ICE might use Euronext for trading in derivatives which is more profitable than equity and the measures that are expected to be announced in 2013 will increase the demand for derivative trading or over the counter contracts. ICE also wants to compete with CME group.

However the charge made by the fund with respect to the price of the deal looks irrelevant as the 52 week high for the share is at $33.38 and as per the technicalities the one year high target is estimated at only $29.5. Experts feel that the synergy between the two exchanges will give rise to a Derivatives Giant.

The shares of Inter Continental Exchange Inc. (NYSE: ICE) were down 0.986% to close at $125.04. The shares of NYSE Euronext (NYSE:NYX) were down 1.12% to close at $31.89.

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Published by Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. You may contact Brendan via his email (brendanbyrne@wallstreetpr.com) or his Google+ page (https://plus.google.com/u/0/116608759701551457422).

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