From the February 01, 2012 issue of Futures Magazine • Subscribe!

Is NYSE-Börse deal dead?

WAITING FOR THE FAT LADY

After getting clearance from the U.S. Department of Justice’s Antitrust Division for their merger in late December, NYSE Euronext and Deutsche Börse AG were hoping for similar clearance from competition authorities in Europe. But that hope now appears to be fading.

Official word from the European Commission is due by Feb. 9, but industry sources say that the European Union’s competition office will recommend against the combination and that the $17 billion deal is all but dead. Some negotiations on possible divestitures of operations are expected to continue as the commission nears its decision, but observers say there is little hope.

“It’s time to get the obituaries rolling,” says exchange consultant Patrick L. Young. “This thing is toast — either that or the parties will have to sever a profit artery to do a deal the market doesn’t want anymore.” He adds that the EU probably did the parties a favor in light of continuing uncertainty about the future of the euro.

As part of its clearance the DOJ has entered a consent decree with NYSE Euronext and Deutsche Börse requiring the sale of the International Securities Exchange’s minority stake in Direct Edge Holdings LLC. ISE is wholly owned by Eurex, the derivatives exchange of Deutsche Börse. The parties would have at least two years from the closing of their combination to sell the 31.54% stake.

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