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UPDATE 3-NYSE Euronext renews calls to back Deutsche bid

Published 04/28/2011, 06:42 AM
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* Q1 revenue $679 million vs $661 million forecast

* Q1 net profit $155 million vs $157 million forecast

* NYSE Euronext shareholder meeting in New York at 1200 GMT

(Adds details, quote)

By Luke Jeffs

LONDON, April 28 (Reuters) - NYSE Euronext, the transatlantic exchange operator, stepped up calls for investors to back an offer worth about $10 billion from Deutsche Boerse as it unveiled robust first-quarter results.

The U.S.-listed exchange, which is battling an aggressive counterbid, on Thursday narrowly missed average profit expectations but topped a mean revenue forecast, driven by derivatives trading, a clutch of new market listings and technology services.

But with some investors calling on NYSE to at least talk to cross-town arch-rival Nasdaq OMX, which is leading a counterbid for NYSE worth around $1.0 billion more, all eyes are on a New York shareholder meeting at 1200 GMT.

U.S.-listed NYSE, which has repeatedly rejected Nasdaq and IntercontinentalExchange's advances, insisted again it was confident growth prospects would be "enhanced and accelerated" by the proposed Deutsche Boerse merger.

"I look forward to articulating the power of the proposed combination at our annual stockholder meeting later today in New York," said Chief Executive Duncan Niederauer.

Analysts welcomed the results, which saw net profit jump 19 percent on 5 percent higher revenues, and one market expert said the numbers underlined the strength of the NYSE management.

"These are solid results which will encourage shareholders that the NYSE management, and their plan to join with Deutsche Boerse, are credible," said Herbie Skeete, managing director at exchange consultants Mondo Visione.

AT LOGGERHEADS

Market experts say NYSE still has a battle to convince investors to back a lower bid with its German merger partner and analysts have speculated that Deutsche Boerse may have to make some gesture ahead of a crucial NYSE shareholder vote on July 7.

The two New York-based exchanges have been locked in an escalating war of words since Nasdaq OMX teamed up with Atlanta-based ICE to launch their higher bid on April 1, a move to derail NYSE's February agreement with Deutsche Boerse.

NYSE's board took just ten days to snub Nasdaq earlier this month, dismissing its bid as "strategically unattractive" and warning of heavy U.S. job losses from such a deal.

NYSE Euronext and Deutsche Boerse are hoping to convince shareholders to back their deal with the promise of savings. Niederauer raised savings forecasts from the potential deal this week, saying a German merger would generate 400 million euros ($587 million) -- 100 million more than originally stated.

Meanwhile, the counterbidders issued an open letter to NYSE shareholders, suggesting they force NYSE directors into talks.

But both NYSE suitors also face regulatory hurdles.

Deutsche Boerse-NYSE would be the dominant force in European futures trading and the largest European equities group, with a strong presence in U.S. options trading.

Under the alternative plan, Nasdaq would take NYSE Euronext's equities businesses, which would give the merged firm a monopoly over U.S. listings and the vast majority of U.S. share trading. ICE, when combined with NYSE Euronext's European futures arm, would also end up with a strong presence in the U.S. and European futures and options markets. (Editing by Erica Billingham and Sophie Walker) ($1=.6817 Euro)

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