NYX Nyse Euronext

The top executive of NYSE Euronext (NYX) said Tuesday that a merger with Deutsche Boerse AG (DB1.XE, DBOEF) would create an exchange company with broad "financial flexibility" to produce value for shareholders, leaving open the possibility of further improving standing terms of the deal.

Duncan Niederauer, chief executive of the Big Board's parent, also took aim at an unsolicited approach from Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE) that he said appears intended to spoil the agreed merger.

"They win if we get a 'no' vote on July 7," said Niederauer in an interview with The Wall Street Journal on Tuesday, referring to the planned shareholder vote on the combination with Deutsche Boerse.

Niederauer this week is canvassing NYSE Euronext shareholders ahead of the company's annual meeting on Thursday, promoting the Deutsche Boerse deal and addressing its perceived "value gap" with the premium offered by ICE and Nasdaq OMX. The Deutsche Boerse combination values NYSE Euronext at roughly $10 billion, while Nasdaq and ICE's proposal puts the Big Board's value at about $11 billion.

"There are a lot of things that can be done to take care of shareholders," said Niederauer, who planned to spend the coming two months intensely focused on ensuring support for a combination that would create the world's largest operator of financial exchanges.

NYSE shareholders understand the strategic value of the deal with Deutsche Boerse, Niederauer said, but some are still looking for the two companies to produce improved terms before the July vote. "We have to spend the next eight to nine weeks understanding what, if anything, is going to be required," he said.

Niederauer this week already has outlined ramped-up synergies in the agreed merger, now identifying EUR400 million in cost savings, or $586 million, up from an initial estimate of EUR300 million.

Adding that figure to an anticipated $133 million in revenue synergies comes out to about $719 million in synergies with Deutsche Boerse, helping close a gap with the $740 million in synergies touted by ICE and Nasdaq OMX. The rivals want to buy NYSE Euronext and split derivatives from equities- and technology-related businesses.

Niederauer said Tuesday that much of the newfound savings would come from streamlined trading technology, as NYSE Euronext and Deutsche Boerse have agreed to boil down systems to a single platform for all markets that incorporates technology from both companies.

"Two months ago, we weren't ready to make that call," Niederauer said, calling it an "emotional" issue for the technology-centered exchange companies.

The decision drew momentum from the Nasdaq-ICE approach, which Niederauer said seemed designed for the NYSE Euronext board to reject. He called the initial approach "a loosely worded" letter with no commitments or protections, and an improved offer last week remained heavily conditional and amounted to "an artificial sweetener."

NYSE Euronext's board of directors twice this month has rejected the counterproposal from Nasdaq OMX and ICE.

"We think it's just to spoil our proposal," Niederauer said. "They do not want to compete against this combined [company]."

The chief executives of ICE and Nasdaq OMX, meanwhile, Tuesday called on NYSE Euronext shareholders to push the Big Board's directors for a meeting, which would carry "no commitment" and reassure NYSE Euronext's shareholders that the company has evaluated all options.

"The NYSE should live up to the principles that they espouse for the stockholders of the companies listed on the New York Stock Exchange," wrote Nasdaq OMX Chief Executive Bob Greifeld and ICE Chief Executive Jeff Sprecher in an open letter to NYSE Euronext shareholders. "Ask your board to reconsider their refusal to engage on our superior proposal."

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com.

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