Nasdaq to pursue NYSE bid to the "endgame"

Nasdaq OMX signs are seen inside their studios at Times Square in New York April 1, 2011.

NEW YORK (Reuters) - Nasdaq OMX Group (NDAQ.O) will pursue its bid for crosstown rival NYSE Euronext (NYX.N) to the "endgame" and is willing to battle for up to another year, its chief executive said.

Robert Greifeld added on Wednesday that he and partner IntercontinentalExchange (ICE.N) could put a "fully reflective" offer on the table if the Big Board parent reveals its detailed financial records to them.

Nasdaq this month joined ICE to bid $11.1 billion for the New York Stock Exchange parent company, which earlier this year agreed to be acquired by Germany's Deutsche Boerse AG (DB1Gn.DE) for $9.8 billion.

Though NYSE's board rejected the higher offer from Nasdaq and ICE, the pair sweetened their bid on Tuesday with a promise to pay NYSE Euronext $350 million if regulators blocked a merger -- a pledge meant to ease the board's antitrust worries and draw them to the negotiating table.

"We are keenly aware that we were uninvited," Greifeld told analysts and media on a conference call that was scheduled to discuss Nasdaq's record first-quarter profit.

"But that has the ability to change as we put things on the table that obviously are attractive to shareholders (and that) will also be attractive to the NYSE board."

NYSE Euronext directors are set to meet on Thursday to discuss the sweetened offer from Nasdaq and ICE, though the company is unlikely to be swayed, a source familiar with its thinking said on Wednesday.

Greifeld, known as an aggressive cost-cutter, said he will continue to try to convince NYSE shareholders of the benefits of his unsolicited bid, saying they are primarily concerned that antitrust regulators will block any deal.

Nasdaq has given "reams of data" about the plan to the U.S. Justice Department, he said, adding that he has had two face-to-face meetings with department officials and expects to have a "two-way dialogue" with them in about six weeks.

The DOJ would have to sign off on any deal to merge the top two U.S. stock exchanges, which would create a virtual monopoly in listing public companies. The NYSE board said on April 10 the Nasdaq/ICE plan had "unacceptable execution risk."

Deutsche Boerse's plan to combine with NYSE Euronext, creating the world's largest exchange operator, faces its own antitrust hurdles because the combined companies would dominate exchange-traded futures in Europe.

ANOTHER OFFER?

Greifeld, a fierce rival of NYSE CEO Duncan Niederauer, said he and ICE CEO Jeffrey Sprecher "will consider all options available to us" as they go after the NYSE, adding he sees a "scenario that takes us out into April 2012."

He said he is taking a friendly approach, hinting it would be in NYSE's best interest to give Nasdaq and ICE access to its books.

"Clearly, diligence is an opportunity for NYSE shareholders to allow us to put on the table an offer that's fully reflective of the knowledge available to us," he said.

Earlier this week, Niederauer said competitors were trying to disrupt, distract and discredit NYSE Euronext, which runs markets in New York, London, Paris and elsewhere in Europe.

Nasdaq shares were down 0.4 percent at $27.30 in midday trade. NYSE Euronext shares were up 1.1 percent at $39.12.

RECORD CORE EPS

The Nasdaq Stock Market parent showed few signs it was distracted from its bread-and-butter operations during the first quarter, as robust derivatives trading boosted earnings.

Excluding one-time items, the company's per-share profit was a record 61 cents, matching analysts' average estimate as compiled by Thomson Reuters I/B/E/S.

"The takeover battle didn't appear to impact them whatsoever," said Richard Repetto, analyst at Sandler O'Neil. "Almost all revenue lines increased, and they continue to see pretty big jumps in their data centers."

Revenue rose 15 percent to $415 million, beating Wall Street expectations. Costs rose 12 percent, offset by a 26 percent rise in trading-based revenue at the U.S.-based, transatlantic company.

While Nasdaq OMX's market share in U.S. stock trading was an all-time low 19 percent in the quarter, it logged a 31 percent rise in derivatives trading, helped by the market reaction to unrest in North Africa and Japan's earthquake and tsunami.

When Greifeld unveiled the NYSE takeover plan on April 1, he said record earnings in the first quarter helped make the move possible. It was the second straight record in terms of earnings per share, helped by recent stock repurchases.

Nasdaq posted net earnings of $104 million, or 57 cents per share, for the quarter, up 70 percent from $61 million, or 28 cents a share, a year earlier.

Its debt stood at $2.3 billion at the end of the quarter.

Some analysts and shareholders worry the company would end up four-times leveraged -- threatening its investment-grade rating -- if it bought NYSE Euronext's stock, options and technology operations. ICE would take the derivatives operations.

(Reporting by Jonathan Spicer; Editing by Matthew Lewis, John Wallace, Dave Zimmerman)