Deutsche's NYSE 'Premium' Eroded As CME, Nasdaq Said To Prowl
February 14 2011 - 4:16PM
Dow Jones News
The implied premium of plans by Deutsche Boerse AG (DB1.XE) to
acquire NYSE Euronext (NYX) was eroded on Monday as speculation
swirled about a counterbid for the operator of the New York Stock
Exchange.
Unsourced media reports suggested CME Group Inc. (CME) could
team with Nasdaq OMX Group Inc. (NDAQ) to bid for NYSE Euronext,
splitting its derivatives and cash-equity operations.
Such a move would reprise efforts six years ago by Chicago-based
CME to bolster its European expansion through acquiring the Liffe
derivatives business now owned by NYSE Euronext. But Nasdaq would
face major regulatory hurdles in securing approval to combine with
the Big Board, despite intense competition in the U.S.
cash-equities sector. Such a tie would create a monopoly in U.S.
stock-market listings.
CME, Nasdaq and NYSE Euronext all declined to comment, but the
speculation helped push up share prices across the sector.
Deutsche Boerse and NYSE Euronext had been seen closing a
planned stock-swap by the end of the year, according to people
familiar with the situation, and further details emerged about the
governance of what would be the world's largest financial-exchange
group.
The eight-member executive committee of the yet-to-be-named
group would be drawn equally from each company, with four NYSE
Euronext executives holding pivotal positions despite its
shareholders' owning around 40% of the new entity.
Duncan Niederauer, chief executive of NYSE Euronext, has already
been identified as CEO of the enlarged company. His deputy,
Dominique Cerutti, would be the Paris-based head of global
information technology and General Counsel John Halvey would retain
that position, according to people familiar with the situation.
Larry Liebowitz would remain chief operating officer and oversee
U.S. equities and global listings from New York, according to these
people.
Deutsche Boerse chief executive Reto Francioni has been
identified as chairman, while sources said his deputy, Andreas
Preuss, would head the global derivatives operation from Frankfurt.
Preuss oversees the company's Eurex derivatives arm.
A formal announcement was expected Tuesday following board
meetings at both companies, while Deutsche Boerse is bringing
forward its fourth-quarter-results announcement by a day to
encompass the expected deal.
NYSE shares were recently up 2.5% at $39.26, having been lower
for most of the session, while Deutsche Boerse was 0.5% lower at
61.33 euros ($83.08), trimming its indicative share of the combined
market value to 61.4%.
The German group's stock price has been steady at around 62% of
the combined group's market value since news of "advanced" talks
between the two was leaked last week, indicating it would be paying
a premium of around 5.7% for NYSE Euronext. The differential had
halved during the session, and in late trading Deutsche Borse was
seen paying a premium of $300 million.
-By Jacob Bunge, William Launder and Aaron Lucchetti,
The Wall Street Journal; 312-750-4117;
jacob.bunge@dowjones.com
--Doug Cameron contributed to this article.
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