UPDATE: NYSE-Deutsche Boerse Deal Carries $339 Million Breakup Fee

The tie-up agreement between NYSE Euronext (NYX) and Deutsche Boerse AG (DBOEF, DB1.XE) would cost a rival bidder about $339 million to break up the deal, according to documents filed with regulators Wednesday.

Both NYSE Euronext and Deutsche Boerse agreed to pay the other party a 250 million euro ($339.5 million) termination fee should the sector-reshaping exchange deal be spoiled, as speculation arose this week around the likelihood of CME Group Inc. (CME) mulling a counteroffer for Big Board parent NYSE.

"By putting something like this in, you're trying to make sure it's too expensive for anybody else to step in," said Brad Hintz, exchange sector analyst with Sanford Bernstein.

Deutsche Boerse and NYSE Euronext agreed Tuesday to a combination that would create the biggest exchange group on the planet, with Deutsche Boerse shareholders owning about 60% of the combined entity.

The new company has no name yet, but the prospective partners have registered the Internet domain www.global-exchange-operator.com, which currently houses an investor presentation.

CME Group Executive Chairman Terry Duffy on Tuesday downplayed the likelihood of the futures exchange company making a run for NYSE Euronext, which he said would be "unrealistic" to dismantle in order to get at the businesses that CME prefers.

The planned exchange group's 17-member board of directors, which includes prospective Chief Executive Duncan Niederauer and Chairman Reto Francioni, is scheduled to shrink to 12 members following the combined company's 2015 general meeting, according to Wednesday's filing. Francioni will serve as chairman until after the 2016 meeting.

Niederauer's role as CEO will include "working closely together with the group chairman and regularly communicating and interacting with the group chairman in the spirit of a permanent and constructive dialogue," the document said.

Members of the planned exchange group's executive committee are expected to receive four year appointments following the deal's closing, expected by the end of 2011. The eight member group, which includes Niederauer and is split between NYSE Euronext and Deutsche Boerse executives, will seek "unanimity" on strategy decisions.

Terms of the agreement call for Niederauer to "keep the group chairman and the board reasonably informed regarding the activities of the [company] and the global executive committee."

Corporate development, merger and acquisition activity, human resources and public relations functions all will have their "primary location" in New York in the initial four years of the new company, with Frankfurt as the "secondary location."

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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