3rd UPDATE: NYSE Board Told To Talk To Nasdaq, ICE

Shareholders loudly told NYSE Euronext's board of directors to open talks with unsolicited bidders Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE), warning that an agreed deal with Deutsche Boerse AG (DBOEF, DB1.XE) undervalues their company.

A provision for investors with more than 10% of outstanding shares to call a special meeting was passed at the Big Board's annual meeting Thursday, while all directors nominated were elected with at least 80% of the vote closely watched for signs of revolt among investors.

"Based on everything I've heard and read, I believe this merger is grossly unfair to the shareholders," Kenneth Steiner, owner of 1,000 NYSE Euronext shares, said at the meeting.

Famed shareholder activist Evelyn Davis interrupted remarks by NYSE Euronext board members multiple times, asking "why didn't you speak to Mr. Greifeld?" She was referring to Nasdaq OMX Chief Executive Robert Greifeld.

"I don't know that I'd have anything to do with him, but I would have talked to him," said Davis.

NYSE Euronext Chairman Jan-Michiel Hessels again rejected the idea of talking to the new suitors, calling their unsolicited bid for his company a "tactic" designed to break up the agreed Deutsche Boerse deal, seen creating a formidable global competitor.

"The board unanimously determined this was the wrong thing to do," Hessels told shareholders. "We see no reason to meet with them."

The remarks came as NYSE Euronext touted a rise in first-quarter net profit Thursday and said its integration planning for its agreed tie-up with Deutsche Boerse AG is on track.

The company also declared a cash dividend of $0.30 a share for the second quarter, matching the dividend announced for the first quarter.

"It's a terrific start to the year by any measure," Chief Executive Duncan Niederauer said at the meeting Thursday.

Niederauer, who has been pitching the tie-up with Deutsche Boerse to shareholders in the past month following an unsolicited approach for NYSE Euronext by Nasdaq OMX Group Inc. and IntercontinentalExchange Inc., said the deal would be the "accelerator" of the Big Board parent's growth.

Net profit attributable to shareholders came to $155 million, up about 19% from $130 million a year earlier.

Excluding costs, NYSE Euronext's first-quarter net profit was $177 million, up 26% from $140 million a year earlier, and earnings per share rose to $0.68 from $0.54 previously. Net revenue rose 5% to $679 million due to a better performance from its three key business segments--cash trading and listings, derivatives and information services.

Niederauer this week canvassed NYSE Euronext shareholders ahead of the company's annual meeting later Thursday, promoting the Deutsche Boerse deal and addressing its perceived "value gap" with the premium offered by ICE and Nasdaq OMX.

Niederauer said that the board also explored potential combinations with Brazilian exchange operator BM&FBovespa (BVMF3.BR), but the larger size of that company and its close relationship with stakeholder CME Group Inc. (CME) made such a deal untenable.

NYSE Euronext's board also weighed a combination with Singapore Exchange Ltd. (S68.SG), which is closer in size to the Big Board parent, but less diversified than chosen merger partner Deutsche Boerse, Niederauer said.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

--Vladimir Guevarra and Kristina Peterson contributed to this article.

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