2nd UPDATE: NYSE Euronext, Deutsche Boerse Seek EU Approval For Merger

Deutsche Boerse AG (DBOEF, DB1.XE) and NYSE Euronext (NYX) said Wednesday they remained upbeat about completing their planned merger by year-end after formally notifying the European Commission ahead of key shareholder votes next week.

The Commission said it will decide by Aug. 4 whether to clear a combination that would create the world's largest exchange operator or launch a second-stage probe that industry experts said could extend into 2012.

The two companies require the green light from more than 40 global regulators as well as shareholders, but the Commission is viewed as key because the proposed deal would combine their European derivatives platforms--Liffe and Eurex--raising the potential of a near-monopoly on interest-rate and stock-index futures trading and clearing in the region.

Antitrust authorities have twice in the last two months signaled the high hurdles facing exchange deals. This month regulators in the U.K. referred the proposed acquisition of European share-trading platform Chi-X Europe by BATS Global Markets to the country's Competition Commission, putting approval of that deal off as long as six months.

In May the U.S. Department of Justice blocked a rival bid for NYSE Euronext pursued by IntercontinentalExchange Inc. (ICE) and Nasdaq OMX Group Inc. (NDAQ), on grounds that combining the Big Board with Nasdaq would create a monopoly.

A spokesman for NYSE Euronext said Wednesday that the EU Competition Commission filing keeps the deal with Deutsche Boerse on pace to potentially close by the end of 2011, the partners' stated goal.

Informal discussions with Competition Commission officials have been progressing since February when the merger plan was first announced.

European Competition Commissioner Joaquin Almunia said in March that the European Union's probable antitrust probe of the planned deal won't be simple and could go into an in-depth phase of analysis.

Exchange executives have signaled that they are prepared to make concessions to secure backing from regulators, though they believe the $23.6 billion combination can proceed without major divestitures.

"Regulators are going to have opinions about the transaction and we're going to have to address their concerns," said NYSE General Counsel John Halvey in an interview with a trade magazine.

NYSE Euronext shareholders vote on July 7, with a majority required to secure backing. Deutsche Boerse requires 75% acceptance of its tender offer by July 13, though the period could be extended, according to a separate filing Wednesday.

Halvey said executives have held more than 400 investor meetings and expressed confidence it would win backing from shareholders and regulators.

Chris Allen, an exchange sector analyst with Evercore Partners, wrote in a research note Tuesday that U.S. authorities' approval of the 2007 merger between the Chicago Mercantile Exchange and Chicago Board of Trade, which gave the combined CME Group Inc. (CME) about 85% of the U.S. futures market, offered a precedent for EU approval of the NYSE-Deutsche Boerse deal.

"Although it's hard to handicap, given the precedence of the CME-BOT deal in the US and the lack of overlapping products, we believe there is a moderately high probability this deal is approved without severe remedies attached," Allen wrote.

Shares of Deutsche Boerse recently were up 1.9% at 52.17 euros. NYSE Euronext shares were 1.7% higher at $33.79.

-By Doug Cameron, Dow Jones Newswires; 312-731-6910

--Matthew Dalton contributed to this article.

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