Warren E. Buffett has built one of the world’s great fortunes looking for companies undervalued by the markets. For a short while, it appears, he considered the New York Stock Exchange‘s parent one of those potential deal targets.
Mr. Buffett’s Berkshire Hathaway made an “indicative proposal†to buy NYSE Eronext in late November, people briefed on the matter told DealBook on Monday. But the initial expression of interest sputtered out fairly quickly, freeing the markets operator to pursue its $8.2 billion sale to the IntercontinentalExchange.
In a proxy statement to investors on Monday, NYSE Euronext said that it had instructed its investment bankers to hold talks with potential alternative bidders to ICE. The filing makes mention only of a Company A, a “large industrial and financial holding company†that the bankers at Perella Weinberg Partners thought might be interested in the exchange.
But the people briefed on the matter confirmed that Company A was in fact Berkshire. One of these people said that NYSE Euronext’s board believed that the exchange fit Mr. Buffett’s deal criteria, including a big brand name and a! steady stream of cash generation.
According to the proxy, Company A offered up its proposal on Nov. 28, with a deal value lower than what ICE was offering. There were other conditions attached: Any takeover offer was subject to due diligence of unspecified length, and NYSE Euronext would first need to sell its European derivatives business, known as Liffe, for a minimum sales price set by the potential buyer.
By that point, NYSE Euronext’s board had already discussed a number of possible corporate moves, including selling or spinning off Liffe. The directors hoped that such a transaction could have raised about $5 billion, one of these people said. A high-enough price could have made a deal more palatable to Berkshire.
But by Dec. 12 and 13, Company A still hadn’t updated its offer, which remained lower than what ICE was proposing. One of the people briefed on the matter said that the preliminary bid never topped $30 a share.
By contrast, ICE’s offer was worth about $33.12 on Dec. 20, the day it was announced. Moreover, that bid had already been in the works for months, and the board opted to go with the sure proposal, this person added.
News of Berkshire’s identity was reported earlier by CNBC’s David Faber.
