Officials at the Nasdaq (NASDAQ:NDAQ) offered to sell off the New York Stock Exchange's popular "listings business" and possibly the NYSE's famed headquarters to appease antitrust regulators concerned about a merger of the world's two most prominent stock markets, FOX Business has learned.
The new details surrounding the negotiations between the Department of Justice's antitrust division and the Nasdaq come as the Nasdaq announced Monday that it's withdrawing its effort to buy the NYSE (NYSE:NYX) and break up the NYSE's planned merger with Germany's Deutsche Boerse.
Nasdaq and its partner in the possible NYSE deal, the IntercontinentalExchange (NYSE:ICE), or ICE, announced they were forgoing the deal because of objections from the DOJ.
Officials at the DOJ said today they threatened to sue Nasdaq and ICE if they moved forward with their bid. But last week, when DOJ was signaling it was intent on quashing the deal, Nasdaq CEO Robert Greifeld made a bold proposal: If he managed to gain shareholder approval to buy the NYSE, he would sell off the NYSE's listing business as a remedy to allay antitrust concerns.
The move was unusual because the conventional wisdom held that the Nasdaq wanted to keep and expand the NYSE's listings business, which is where companies pay as much as $500,000 to hold the imprimatur of the NYSE on their shares and be designated an NYSE-listed stock.
Listings are the most prominent of all the NYSE businesses, celebrated almost daily at the Big Board, where newly minted NYSE companies ring the opening and closing bells marking the beginning and end of trading each day.
Without listings, the Nasdaq would keep the NYSE's derivatives business, its electronic trading platform and its European franchise, while the ICE would still control the options business. The Nasdaq was even willing to give up the iconic NYSE building. But most importantly, it would be able to make a hostile bid to break up the planned NYSE/Deutsche Boerse merger with a higher bid that many shareholders preferred.
But in the end, the DOJ said the deal wouldn't fly. A spokeswoman for the DOJ didn't return a telephone call for comment on the Nasdaq proposal to give up listings, but today in a conference call with reporters, DOJ's antitrust chief Christine Varney said a Nasdaq-NYSE hookup would have constituted a monopoly. She did not address questions about the Nasdaq's proposal to sell off listings, which many analysts believed was the major issue facing Greifeld as he sought DOJ approval.
Some analysts have questioned whether the DOJ bowed to political pressure from New York lawmakers, who voiced support for the NYSE-Deutsche Boerse merger over the Nasdaq-ICE because the Nasdaq deal might lead to NY-area layoffs.`