Gregory Vousvounis'  Instablog

Word broke out that Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) made a bid for Nyse-Euronext (NYX). This bid was offered when NYX sent its bankers looking for alternatives to ICE's offer to buy it out for $8.2 billion or $33.12/share using stock and cash to facilitate the transaction.

Buffett's offer though had a caveat. He asked that the company be subject to due diligence for an "unspecified" amount of time and the sale of the company's European derivative business called "Liffe" at a price set by him. The company's director's according to Dealbook, estimate that Liffe's sale could have raised approximately $5 billion.

Let's do the math. We know that Buffett's price was below $30 per share or $7.3 billion. As a condition he asked the company to sell a subsidiary that is worth about $5 billion or $20/share. Furthermore Nyse-Euronext's tangible assets are worth $1.45 billion or $6 per share.

Doing the calculation ($30-($20+$6)), we can conclude that Buffett offered to buy the company for a maximum net price of $972 million or $4/share! That is less than 2 times Nyse-Euronext's expected earnings for 2013 which analysts expect at least $2.14.

Well, if you ask me, Warren Buffett is one tough negotiator! No wonder he made it to be one of the world's richest men alive.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.