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NYSE, ICE Deal About Everything but Stocks

ICE said it would explore a Euronext public offering; however, earlier reports of the proposed transaction had some analysts handicapping whether ICE could sell all of NYSE's stock exchange operations.

Even though the reported combination has few overlaps that could draw antitrust issue, Stifel Nicolaus analyst Matthew Heinz wrote, " We do believe NYX's cash and options business will ultimately wind up in the hands of another suitor (e.g. BATS, Direct Edge, TMX, LSE), any owner other than Nasdaq would likely avoid the DOJ's ire on listings, which effectively served as the nail-in-the-coffin," for the joint bid last year. His comments were also published before terms of the deal were released.

" The ultimate success or failure of this (potential) transaction will indeed hinge on the appetite for NYSE's cash equity and options businesses," added Heinz, who notes both BATS Global Markets and DirectEdge have stated an interest in becoming publicly traded companies, and could effect such a goal through an acquisition of NYSE's equities business.

A prospective deal "could present an opportunity for either exchange to take itself public via a tax efficient, Reverse Morris Trust (RMT) transaction," the analyst wrote.

"There's no spinning this off," said ICE chief executive Jeffrey C. Sprecher, of NYSE's New York-based equities business, in a Bloomberg Television interview. "We want this business."

In a statement announcing the deal, ICE forecast $450 million in expected second year synergies and noted "ICE clearing will be more capital efficient and provide operational efficiencies for clearing members."

In the merger, ICE's Sprecher will continue as Chairman and CEO of the combined company, while NYSE Euronext head Duncan L. Niederauer will be president of the combined company and CEO of NYSE Group. NYSE Euronext would also see four of its board members join ICE's board, which would be expanded to 15 members.

The combined company's headquarters would be in Atlanta, where ICE is headquartered and in New York, home to NYSE.

"Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities, while enhancing competition in US and European markets and broadening our ability to address new markets and offer innovative products and services on a global platform," Sprecher said in a statement.

"The Board of NYSE Euronext carefully considered a range of strategic alternatives and concluded that ICE is the ideal partner for NYSE Euronext in an evolving market landscape," Jan-Michiel Hessels, NYSE Euronext chairman, added in a statement.

The prospective merger is expected to close in the second half 2013, and is subject to shareholder approval and regulatory reviews in Europe and the U.S.

-- Written by Antoine Gara in New York

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