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CHICAGO, April 12, 2011 /PRNewswire/ -- Zacks.com
announces the list of stocks featured in the Analyst Blog. Every
day the Zacks Equity Research analysts discuss the latest news and
events impacting stocks and the financial markets. Stocks recently
featured in the blog include: NYSE Euronext Inc. (NYSE:
NYX), NASDAQ OMX Group Inc. (NDAQ),
IntercontinentalExchange Inc. (NYSE: ICE), CME Group
Inc. (NYSE: CME) and The Boeing Co. (NYSE:
BA).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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Here are highlights from Monday's Analyst Blog:
NYSE Turns Away from NASDAQ-ICE
In a dramatic turn of events, yesterday NYSE Euronext
Inc. (NYSE: NYX) discarded the proposed takeover bid made by
NASDAQ OMX Group Inc. (NDAQ) and IntercontinentalExchange
Inc. (NYSE: ICE), citing multiple concerns.
The NYSE management cited that it is not interested in splitting
up the company's business while also extending additional debt
burden on it, thereby posing ample execution risk on the company.
Simultaneously, NYSE continues to work towards its acquisition by
Frankfurt-based Deutsche Boerse AG
announced in February this year.
Last week, NASDAQ and ICE had offered $43.13 per NYSE share in a joint bid, one-third
in cash and two-third in stock, totaling to approximately
$11.3 billion. This was about 15%
higher than the earlier proposed merger between NYSE and Deutsche
Boerse of $10.0 billion. NASDAQ and
ICE had planned to finance the cash portion of the deal through
cash on hand and a combined financing of $3.8 billion.
While ICE was expected to take over NYSE's European futures
markets (Liffe, Liffe U.S.) and the over-the-counter clearing
business (NYPC), NASDAQ was expected to take care of the remaining
businesses of NYSE, such as the NYSE Euronext stock exchanges in
New York, Paris, Brussels, Amsterdam and Lisbon as well as the U.S. options
business.
The Multiple Concerns over NYSE-NASDAQ
Although offering a deal of much higher value, NYSE elucidated
on the various regulatory, political and commercial hurdles that
the NASDAQ-NYSE merger could pose. These include loopholes in
NASDAQ's financing commitments along with its potential debt burden
that would be mounted following the deal.
Also, the debt burden associated with the proposed deal also
drove rating agencies Moody's and Standards and Poor's to lower
their outlook on NASDAQ from stable to negative last week.
Moreover, the proposed merger of the two big giants in the US
would pose antitrust problems since the merger of NASDAQ and NYSE
would mean erosion of competition and give way to a monopolistic
structure. Additional concerns about the bulk layoffs have also
been raised, which could adversely impact the unemployment
index.
Any counter-bid in the NYSE-Deutsche deal also appears
restrictive since the agreement of the deal includes a $337 million break-up fee in case the deal is
spoilt by a new bidder and tax issues, among others. Hence, given
these multiple risks associated with the deal, the board of NYSE
decided to turn down NASDAQ and ICE's joint bid.
NYSE-Deutsche Deal Hailed
Although the NYSE-Deutsche deal is lower in value, NYSE believes
that its merger with Deutsche Boerse is well positioned to yield
effective long-term synergies, making it a leading exchange
operator in both scale and strength. The two parties are also
confident of achieving the regulatory approval in Europe even though the chase is intense and
time-consuming.
This strategic combination is further projected to create
significant growth opportunities from the rapidly growing Asian and
Latin American countries. With more than 18 million contracts
traded per day and the only clearing house offering real-time
position monitoring, the merged group will be the leading provider
of the latest technology, market-data and information services
through its sound infrastructure.
As a result of these factors, the merger is expected to become a
capital generating hub with the highest market capitalization
considering the next four leading exchange operators. The deal is
expected to close by the end of this year.
Still Apprehensive on NYSE-Deutsche Deal
On the other hand, NASDAQ has been desperately hunting for a
partner to make counter-bid to acquire NYSE since the announcement
of the NYSE-Deutsche merger, in order to retain its market value
and strength in the industry.
NASDAQ fears that the culmination of NYSE-Deutsche deal will
diminish the former's size and global footprint. The prospective
deal's combined exchanges and clearing houses would generate an
annual €4.0 billion ($5.5 billion) in
revenues, more than any other exchange group.
Additionally, this would out beat all the exchange operators
with the largest derivative business, representing 37% of net
revenue against NASDAQ's 17% of net revenue as reported in 2010.
Even the next biggest operator, CME Group Inc. (NYSE: CME)
in the US, with €2.3 billion in revenues and holding 98% market
share of the US futures trading, would lag far behind the
NYSE-Deutsche combination.
However, even a $1.3 billion
appreciation in the deal could not cast a spell on NYSE. Meanwhile,
NASDAQ and ICE showed disappointment by claiming that NYSE is
denying its shareholders the maximum return by disregarding their
bigger offer. Hence, both NASDAQ and ICE are expected to discuss
this case with the investors.
Industry Trends
Recently, the stock exchange industry has aligned itself with
the changing market needs and has consequently become a hub for
M&A activities. More than $20
billion of proposed acquisitions have been announced in the
last six months.
While London Stock Exchange (LSE) is on its way to complete a
merger with Toronto Stock Exchange owner TMX Group, the Singapore
Exchange and Australia's ASX is
also rigorously reviewing of its own merger plan.
Boeing Flying High in Q1
The international commercial airplane producer, The
Boeing Co. (NYSE: BA) maintained its delivery level in the
first quarter of 2011 with deliveries of 104 airplanes versus 108
in the first quarter of 2010.
Boeing is on course to meet its commercial airplane delivery
target for 2011, which is expected to be in the range of 485 to 500
airplanes. The guidance also includes the expected delivery of the
first 787 and 747-8 models, starting from the third quarter, and
together accounting for 25 to 40 airplanes.
The commercial airplane market is showing gradual signs of
improvement, as reflected in the order books of the commercial
airplane manufacturer. The gross order received by the company in
the first quarter of 2011 was 153 airplanes versus 100 airplanes in
the year-ago period.
The 737 model continues to be a major pillar of Boeing's
strength in the commercial airplane sector, followed by its 777
model. Both these models continue to do well due to their fuel
efficiency and lower operating costs compared to competing
models.
Boeing's closest international peer in the commercial airplane
market is France based Airbus.
Airbus outpaced Boeing when it received an order from Indian low
cost carrier Indigo for 180 eco-efficient Airbus A320 aircraft of
which 150 will be A320neo's and 30 will be A320s. However, Boeing
is gradually catching up with its successive order wins for its
commercial models.
Boeing expects commercial airplanes to generate revenues in the
range of $36 billion to $38 billion
in 2011, exceeding the 2010 level of $31.8
billion. However, the delay in delivery of the 787
Dreamliner continues to remain a cause of concern besides the
cancellation of order for 12 787's in the first quarter 2011.
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