Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. pulledtheir bid for NYSE Euronext after talks with U.S. regulators showedthey wouldn't secure antitrust approval, clearing the path forDeutsche Boerse AG.

NYSE Euronext agreed to be bought by the Frankfurt-based bourseon Feb. 15, a merger that would create the world's largest exchangeoperator. The NYSE board twice rejected a rival proposal fromNasdaq and ICE, saying the unsolicited offer would lead to too muchdebt and regulatory opposition.

“It became clear that we would not be successful in securingregulatory approval for our proposal despite offering a variety ofsubstantial remedies,” Bob Greifeld, chief executive officer ofNasdaq, said in a statement today. “We saw a unique opportunity tocreate more value for stockholders and strengthen the U.S. as acenter for capital formation amid an ongoing shift of these vitalactivities and jobs outside of our country.”

Nasdaq again finds itself without a partner in the global waveof mergers that has swept the exchange industry. The second-biggestU.S. exchange operator was counting on its plan to merge itsstock-trading and listings operations with NYSE Euronext as a wayto eliminate costs in businesses where competition has reduced itsprofits and market share.

NYSE Falls NYSE sank 11 percent to $36.59 at7:57 a.m. in pre-market New York trading. Nasdaq slipped 2.1percent to $26.34.

Nasdaq and ICE's withdrawal paves the way for NYSE shareholdersto approve the merger with Deutsche Boerse at a special meetingscheduled for August. NYSE CEO Duncan Niederauer may be free tocreate an exchange company with operations in 11 countriesgenerating 5.6 billion euros ($7.9 billion) in sales and 869million euros in earnings annually. Earnings before interest andtaxes would have been 1.1 billion euros for the year ending Dec.31.

The Nasdaq-ICE proposal would have broken up NYSE Euronext, withNasdaq taking the stock and options trading and the listingsbusinesses. ICE would have kept the Liffe futures markets. NYSEEuronext based its opposition to the proposal on grounds thatconcentrating the business of stock listings, in which companiesraise money by selling shares on an exchange, in the hands of asingle operator would be blocked by regulators.

Greifeld today said the U.S. government's expedited reviewshowed opposition came even after he and ICE Chief Jeffrey Sprecherproposed remedies including a sale of the NYSE's self- regulatoryarm.

Nasdaq and ICE dropped their bid for NYSE days after a group ofCanada's biggest banks and pension funds made an unsolicited C$3.6billion ($3.7 billion) bid for TMX Group Inc. to keep the country'smain stock exchange in Canadian hands while sacrificing globalgrowth from a planned merger with the London Stock Exchange GroupPlc.

The counteroffer may end TMX's efforts to join in the biggestround of global consolidation of exchanges, and leave LSE without apartner as it seeks to expand internationally and compete withlarger rivals. LSE's bid for TMX was part of more than $30 billionin takeover offers for exchanges in less than six months.

Shares in LSE surged as much as 8.6 percent after Nasdaq'sannouncement and traded 6.9 percent higher at 884.5 pence at 1:05p.m. in London.

NYSE Euronext's agreement with Deutsche Boerse has been subjectto virtually no political opposition in the U.S. even as it wouldleave Deutsche Boerse's shareholders with majority control. SenatorCharles Schumer, a Democrat from New York who has involved himselfin securities industry regulation, said in February that his mainconcern was preserving the NYSE in the combined company's name. Hewrote a letter to Nasdaq OMX and ICE on April 25 asking for anestimate of job losses in their plan.

Bloomberg News