Nasdaq, ICE doubt NYSE-D.Boerse cost savings

NEW YORK Mon Apr 25, 2011 11:43am EDT

The DAX board and trading floor are pictured at the Frankfurt stock exchange April 4, 2011. REUTERS/Alex Domanski

The DAX board and trading floor are pictured at the Frankfurt stock exchange April 4, 2011.

Credit: Reuters/Alex Domanski

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NEW YORK (Reuters) - Nasdaq OMX Group Inc (NDAQ.O) and IntercontinentalExchange (ICE.N) said NYSE Euronext NYX.N investors should be "highly skeptical" of additional merger cost savings outlined by NYSE and Deutsche Boerse AG.

Nasdaq and ICE are hoping to thwart the Deutsche Boerse (DB1Gn.DE) deal, having offered $11.2 billion to buy NYSE after Deutsche Boerse and NYSE agreed to a $9.8 billion merger.

NYSE Chief Executive Duncan Niederauer raised the estimate of potential cost savings from the Deutsche Boerse deal by about a third, to some 400 million euros ($580 million), a spokesman said on Sunday.

NYSE has rejected the rival bid by Nasdaq and ICE twice as too risky.

Nasdaq and ICE said on Monday that the newly found cost savings were not the result of "sharpening a pencil, but an unexplained shift in strategy."

The exchange operators also noted that shareholders have not been offered an increase in price.

Niederauer's new estimate puts the cost and revenue benefits in the NYSE-Deutsche Boerse deal closer to the $740 million in synergies that Nasdaq and ICE see in their rival bid for NYSE.

On Monday, Nasdaq and ICE also came under fire from a prominent U.S. lawmaker regarding the impact of large cost cuts on jobs.

U.S. Sen. Charles Schumer of New York asked Nasdaq and ICE about potential job losses that could result from their proposed deal before making any more bids.

The impact of the deal on jobs in the New York City area would be "a major consideration in judging any potential transaction," Schumer wrote in a letter to Nasdaq CEO Robert Greifeld and ICE CEO Jeffrey Sprecher.

Schumer said NYSE officials had privately told him that a merger with Nasdaq and ICE would result in 1,000 to 1,100 U.S. job losses, including roughly 800 in the New York City area.

The bidding war has raised questions about which deal is better for shareholders, given the price disparity and regulatory hurdles.

NYSE shareholders are meeting on Thursday for their annual vote on the company's directors. The shareholder vote on the NYSE-Deutsche Boerse deal is expected on July 7.

NYSE Euronext shares were down nearly 1 percent at $38.68 and Nasdaq OMX Group shares were down 1.7 percent at $27.07 late on Monday morning.

(Reporting by Lauren Tara LaCapra and Paritosh Bansal; Editing by Derek Caney and Matthew Lewis)

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