Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

NYSE-Deutsche Boerse Said to Lack Support to Overturn EU Ban

Traders work at computer screens inside the Frankfurt Stock Exchange in Frankfurt, Germany. Photographer: Hannelore Foerster/Bloomberg
Traders work at computer screens inside the Frankfurt Stock Exchange in Frankfurt, Germany. Photographer: Hannelore Foerster/Bloomberg

Jan. 24 (Bloomberg) -- NYSE Euronext and Deutsche Boerse AG are unlikely to garner enough support from European Union commissioners to overturn a looming veto over their plan to create the world’s largest exchange, according to four people familiar with the situation.

The EU’s antitrust chief, Joaquin Almunia, won’t face significant opposition from other EU commissioners to his proposal to block the deal at a Feb. 1 meeting, said the people who can’t be identified because the discussions aren’t public. The European Commission, the EU’s executive arm, is led by 27 commissioners drawn from each of the bloc’s member states. They must jointly approve EU decisions.

EU regulators told the two companies that they plan to prohibit the deal to create the world’s largest exchange because it would monopolize derivatives trading in the region, according to two people familiar with the draft decision in December. NYSE and Deutsche Boerse appealed directly to commission President Jose Manuel Barroso earlier this month to try and salvage their merger, arguing an EU ban would harm European exchanges and drive business to other parts of the world.

A veto may suggest “that the regulators have renewed confidence to torpedo high-profile deals,” said Alasdair Balfour, a London-based lawyer with Fried, Frank, Harris, Shriver & Jacobson LLP.

National competition regulators from the EU last week backed Almunia’s plan to block the deal, according to a person familiar with the non-binding vote.

Barnier Letter

EU Financial Services Commissioner Michel Barnier asked for more time to review the deal after returning from a trip to Asia, according to a person familiar with the situation who declined to be identified because the discussions are private. The Financial Times reported the so-called waiting-reserve letter earlier today.

Chief Executive Officers Duncan Niederauer for NYSE and Reto Francioni for Deutsche Boerse get a chance to rub shoulders with regulators including Almunia at the World Economic Forum in Davos this week.

NYSE spokesman James Dunseath in Davos declined to comment on the commissioners’ stance on the deal. Frank Herkenhoff, a spokesman for Deutsche Boerse in Frankfurt, and Antoine Colombani, a spokesman for the commission, also declined to comment.

Steel-Tube Companies

EU commissioners have only once overruled the antitrust unit’s proposed merger ban when they approved the 1994 combination of three of Europe’s largest seamless steel tube companies, Germany’s Mannesmann AG, Italy’s Ilva SpA and France’s Vallourec SA. EU antitrust officials had opposed that deal arguing it would hurt competition.

A merger prohibition next week would be the EU’s fourth since 2004 when it overhauled its rules for reviewing deals. Previous merger prohibitions were for “clearly very problematic” combinations, said Balfour.

The takeover would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one organization.

Deutsche Boerse’s Eurex is the region’s biggest derivatives exchange, while NYSE Euronext owns Liffe, the second-biggest in Europe.

The Frankfurt-based company agreed to acquire its New York rival in a deal valued at $9.5 billion when it was announced in February. Since then, the value has plummeted to about $6.8 billion. The all-stock transaction is intended to give Deutsche Boerse 60 percent of the combined entity, while NYSE Euronext CEO Niederauer would run the organization.

Possible Appeal

The Association for Financial Markets in Europe, a group that represents lenders and brokers including Goldman Sachs Group Inc., Bank of America Corp., Deutsche Bank AG and UBS AG, have told regulators that the takeover will hurt competition.

Companies can appeal a merger ban at the EU courts, which takes about three years, according to Douwe Groenevelt, a lawyer at De Brauw Blackstone Westbroek in Brussels.

“If you win, a lot of the synergies may have already been lost so it’s a difficult decision,” Groenevelt said in a telephone interview.

NYSE Euronext and Deutsche Boerse can withdraw from the merger if they are handed down a “final, binding and non-appealable” refusal of the deal. Each exchange “must have used its reasonable best efforts to prevent the denial,” according to the offer document. The companies may otherwise be liable to pay a 250 million euro ($326.15 million) break-up fee.

Cost-Cutting Opportunities

Exchanges seek to link up because they have “relatively little control over their top lines and it’s all about cutting costs,” said Richard Perrott, an exchange analyst at Berenberg in London, who rates Deutsche Boerse a “buy.” A merger “like this offers hard cost-cutting opportunities.”

Governments have been reluctant to show support for the merger aside from French Finance Minister Francois Baroin who said in November that the tie-up was an “historic opportunity” for the Paris stock market. The German government earlier this month indicated it wouldn’t get involved in the discussions.

Ann-Christin Wiegemann, a spokeswoman for the Economy Ministry in Berlin, said on Jan. 13 that the decision “lies exclusively with” the Brussels-based antitrust authority.

Dutch Finance Minister Jan Kees de Jager said last week that NYSE and Deutsche Boerse’s proposed sale of NYSE’s Amsterdam options exchange may be a risk to the functioning of capital markets.

‘Political Interference’

U.K. Treasury Minister Mark Hoban last week urged the commission to shun any “political interference” when it decides on the deal.

London Stock Exchange Group Plc in 2001 tried and failed to buy the London-based Liffe derivatives exchange, later bought by NYSE Euronext.

Deutsche Boerse last week offered a package of concessions to regulators in the German state of Hesse in response to concerns over how the merger would affect its business in the area, including a pledge to invest 300 million euros over three years. Hesse will rule on the deal after the EU decision and has the power to block the deal.

To contact the reporters on this story: Aoife White in Brussels at; Nandini Sukumar in London at

To contact the editors responsible for this story: Anthony Aarons at; Andrew Rummer at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.