German bid to buy New York Stock Exchange faces rejection
European regulators appear set to shoot down a controversial deal that would have seen Germany’s largest stock exchange buy the New York Stock Exchange.
In a video message sent to employees of the Big Board on Wednesday, the chief executive of NYSE Euronext, Duncan Niederauer, acknowledged the growing rumors that European regulators are preparing to reject the deal due to fears that the new company would violate antitrust laws.
NYSE Euronext and the German exchange, the Deutsche Boerse, announced in February that the German company would acquire the New York exchange and its web of global subsidiaries in an exchange of stock.
Niederauer said Wednesday morning that he and his counterpart at the Deutsche Boerse had not received a final decision from the European Commission, but he expressed his disappointment that the combined company is being viewed as a monopoly threat.
“I have to tell you I think that’s a conclusion that results from a fundamentally flawed technical analysis that ignores the realities of the marketplace that we live and work in every day,” Niederauer said in the video, which was leaked early Wednesday.
European regulators are reportedly concerned that the new company would have a virtual monopoly in the European derivatives trading business, the most lucrative and fastest growing part of the two companies.
The decision still needs to come up for a vote in front of the European Commission, which could reject the recommendation of staff regulators. The two companies are hoping to convince members of the commission that the new derivatives business would have plenty of competition from other exchanges around the globe, according to people close to the situation.
“Over the next few weeks we’re going to continue to press our case directly with various commissioners in the EU, both to highlight the serious flaws in the case team’s core argument, and to ensure that there is a clear understanding of the strong benefits that our combination will bring to a broad set of stakeholders in Europe,” Niederauer said in his message Wednesday.
If the commission does reject the merger, it would bring a sudden end to a highly touted deal that was set to change the face of securities trading.
The sale of the New York exchange faced immediate backlash from traders on the exchange and U.S. politicians, who were bothered by the prospect of the iconic New York business coming under foreign ownership. The new company was set to have joint headquarters in the U.S. and Germany.
Major U.S. regulators have already signed off on the deal.
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-- Nathaniel Popper
