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NYSE Euronext/Deutsche Boerse Deal Inches Forward

14 July 2011 - News - Editor

Deutsche Boerse shareholders, representing up to 60 percent of the German exchange's voting shares, indicated on Wednesday just hours before the close of the deal that they approve of the proposal to merge with NYSE Euronext. While 75 percent is required for the deal to move forward, it is reportedly quite common for institutional investors to hold back tendering their shares until just before an offer ends. Based on past trends, analysts have voiced confidence that the 75 percent requirement will be attained. The merger of these two historic exchanges will result in the largest stock exchange in the world. However, there is still plenty of red tape to cut through, and scrutiny by anti-trust authorities to be dealt with before it is a done deal.

NYSE Euronext has been experiencing technical problems, disrupting trade and leading to speculation that the exchange will switch to Deutsche Boerse trading technology if the deal goes through. But it could take the rest of this year to seal the deal, and stock market players have noted that NYSE Euronext is not in the position to wait until then. At the beginning of this week, NYSE Euronext benchmark equity indexes didn’t update for more than three hours in the Netherlands, Belgium, Portugal and France. This latest technical hiccup comes on the heels of a fault that halted trading in CAC40 stocks for around 45 minutes on June 27, as well as delays in trading experienced in Paris, Brussels, Amsterdam, Luxembourg and Lisbon the week prior to that. While stating that the recent incidents disrupting trade were unrelated, a spokesperson for NYSE Euronext noted that they are operating with a "mixture of hardware and software that adds to the challenge".

With new trading platforms such as Bats Europe and Chi-X Europe Ltd entering markets, existing exchanges are pursuing mergers in an effort to strengthen their market-share position. Recent merger bids that have failed include the proposed deal between Canada's TMX Group and the London Stock Exchange Group, as well as between Australia's ASX Ltd and the Singapore Exchange. In April of this year, NYSE Euronext received an unsolicited acquisition bid presented by Nasdaq OMX Group and Intercontinental Exchange Inc. – a bid that was rejected by the US Department of Justice.

 


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