As the New York Stock Exchange fends off a hostile bid by the Nasdaq, competition for prominent stock listings— especially of the high-profile tech variety— has never been fiercer. Tech has traditionally been Nasdaq turf: Intel, Google and Microsoft all list on the exchange. Just not for long, according to the NYSE. LinkedIn announced last week that it will list its shares on the NYSE under the symbol “LNKD” becoming the latest high-profile tech company to shun the Nasdaq in favor of the NYSE. Pandora announced it will also join the Big Board. So will storage outfit Fusion-io. Renren, the “Facebook of China,” started trading on the NYSE last week.
Meanwhile, SuccessFactors recently announced its transfer from the Nasdaq to the NYSE. The NYSE is expected to announce it has poached another Nasdaq listee later this week. That will make for 19 companies that have transferred their listing from the Nasdaq to the NYSE since January 2010. None have gone the other way.
Those bragging rights will prove critical as NYSE CEO Duncan Niederauer tries to convince NYSE Euronext shareholders to reject Nasdaq’s hostile bid in favor of a friendly merger with Frankfurt-based Deutsche Börse, a move that would create the world’s largest exchange owner. Niederauer certainly has his work cut out for him: Nasdaq’s bid represents a $1.3 billion premium over the Deutsche Börse deal. Deutsche Börse employee representatives have urged shareholders to reject the NYSE Euronext deal for fear of job cuts.
The NYSE has already twice rejected a meeting with Nasdaq executives, saying the offer would lead to too much debt and regulatory hurdles. At a UBS conference today, Nasdaq CEO Robert Greifeld said he plans to plow ahead with a tender offer “within weeks.” I caught up with Scott Cutler, executive vice president at the NYSE and co-head of U.S. listings, to discuss what he calls the Nasdaq’s “propaganda campaign,” recent wins for the Big Board and why he thinks the proposed merger with Deutsche Börse would make more sense for NYSE shareholders than going with the other guy.
Let’s start with the Big Board’s recent coups. LinkedIn, Pandora and RenRen all decided to list on the NYSE instead of the Nasdaq. What’s the back story there? While the NASDAQ has been waging their propaganda campaign, we’re winning the ground war—especially on the IPOs. If you look at everything that’s happened so far this year, from the large private equity transactions—we have won every single one— to the technology transactions— RenRen, LinkedIn, Pandora, The Active Network, Freescale— it’s really been a complete sweep of the table for the NYSE. We remain very focused on extending our global community to emerging growth, technology-focused companies wherever they’re coming from. We’re seeing these companies come from the Valley, obviously from the Midwest, New York, China. We are going to see one of our first technology-focused listings from Latin America later on this year.
Which listing would that be? I can’t say.
So what’s the pitch? Why would a technology company list with the NYSE? The pitch for us continues to be a business partnership that leverages our brand, our network and our community for their business benefit. If you looked at LinkedIn, what brought us to the table was our track record of technology, our track record in the Valley and the relationship we’ve built with their management team over the last couple years. What brought us over the finish line was a partnership that leveraged our professional community with theirs. There are great business synergies with a lot of the companies we’re working with and I think that’s why we win. The Nasdaq recently suggested that the NYSE was losing ground in stock listings. That statement is absolutely ridiculous. Look at the facts: We were number one in the world in the first quarter in capital raising. Nasdaq was number ten. We represented 66% of the technology IPOs in the first quarter.
Every single private equity firm—100%– listed on the NYSE. It has essentially been a complete crushing of the Nasdaq. Of companies that are already listed, we’ve had four transfers so far this year, even with the proposed merger with Deutsche Börse. We’ve had Imax and SuccessFactors. Successfactors announced their transfer from Nasdaq, their listing on our Euronext market and their listing on Deutsche Börse— and that deal hasn’t even closed yet. And later on this week, we will be announcing another tech transfer. We haven’t had any that have gone the other way. Eighteen have come from Nasdaq. So there’s actually not one metric or quadrant in the world or sector in which Nasdaq is beating the NYSE. Not one.
Are these companies coming to you? Or is this part of an aggressive outreach strategy? It’s both. We have an active outreach that continues to be an area of intense competition. It’s similar to the IPO landscape where we develop relationships and convince people of the value proposition. Imax is making this move because they wanted to show the world that they are a global company with a global presence and their partnership with the NYSE could deliver that. SuccessFactors was about global partnerships and global listing. As companies are evolving, they are looking for global partners and finding that at the NYSE.
Let’s talk about the proposed takeover. Proposed merger, right?
Okay, the proposed merger with Deutsche Börse. The NYSE is the leader in global listings. We are the leader in cash equities, but we are the number four player globally in the derivatives marketplace. So the combination with Deutsche Börse really creates the largest exchange group in the world by market capitalization, the leader in the derivatives market and the leader in technology and market data. That global leadership position is where we want to be.
I understand Duncan [Niederauer] is meeting with shareholders to garner support for the Deutsche Börse merger. What’s next? There’s a shareholder vote in early July and shareholders will be voting on the DB deal. In light of Nasdaq’s hostile deal, we have to convince shareholders that this is the right strategy and they’re getting the best value out of this transaction.
Everyone’s holding their breath for a few select companies to go public. How do you plan on luring those companies to the Big Board? We are very focused on the next emerging category leaders and we are going to focus on every space in which we compete, which is everywhere. There has been a change in the mindset. As more of these companies go public on the NYSE—and succeed— it creates a lot more excitement around the opportunity to go public. So I think the actors that will go public in the next few weeks– LinkedIn, Pandora—are a teaser for some really significant transactions to come, whether that’s Groupon or Gilt or Facebook or others.
What role is the NYSE playing in opening up access to markets? We’ve been pushing for an amendment to Sarbanes-Oxley… which provides more companies with greater access to public markets at lower thresholds. We’ve also been advocating on behalf of capital markets in the U.S. It’s a role and responsibility we take pretty seriously.
Are you reserving any specific stock symbols we should know about? We do. If a company wants a symbol, we’ll reserve it for them but your symbol does not necessarily represent which market you’re going to list on anymore.
Nasdaq Transfers to the NYSE Since January 2010:
|Company||Ticker||Transfer Date||Market Cap|
|Kapstone Paper and Packaging Corporation||KS||1/4/10||447.78|
|Targa Resources Partners LP||NGLS||1/25/10||1,613.37|
|Charles Schwab Corp.||SCHW||3/5/10||22,604.42|
|Paragon Shipping Inc.||PRGN||3/24/10||233.93|
|Inergy Holdings, L.P.||NRGP||3/24/10||1,485.70|
|Knight Capital Group, Inc.||KCG||5/25/10||1,344.83|
|Monmouth Real Estate Investment Corp.||MNR||6/1/10||233.62|
|Corporate Executive Board Co.||EXBD||8/20/10||1,000.74|
|United Continental Holdings||UAL||10/1/10||7,817.75|
|GFI Group Inc.||GFIG||10/5/10||607.38|
|Main Street Capital Corp.||MAIN||10/14/10||299.72|
|Compass Diversified Holdings||CODI||11/1/10||696.38|
|Triangle Capital Corp.||TCAP||12/29/10||286.98|
|USANA Health Services Inc||USNA||1/3/11||693.85|
|Miller Energy Resources||MILL||4/12/11||225.71|
|Upcoming Company||Ticker||Transfer Date||Market Cap|