NYSE confident of shareholder backing for merger

By Douglas Busvine and Kiryl Sukhotski, Reuters June 18, 2011

 

 

 

NYSE Euronext Chief Executive Officer, Duncan Niederauer, speaks during an event at the New York Stock Exchange, April 18, 2011.

Photograph by: Brendan McDermid, Reuters

ST PETERSBURG, Russia, June 18 (Reuters) - NYSE Euronext and Deutsche Boerse expect to win shareholder support to merge and get the combined exchange operator up and running by year end, NYSE Euronext CEO Duncan Niederauer said.

Niederauer is lobbying to win approval for the $10.2 billion tie-up, which would be 60 percent owned by Deutsche Boerse’s shareholders but which he would run, at shareholder votes in the first half of July.

"Our vote’s July 7; their tender offer expires about a week after that," Niederauer told Reuters Insider TV in an interview on Saturday at the St Petersburg International Economic Forum.

"Assuming we have the votes — which we both believe we will now — we will spend the rest of the year focused on integration and getting the requisite regulatory approvals, which have been moving along on schedule.

"We are still on target for a final decision by the end of this year, and hopefully we start operating as the new company January 1."

Deutsche Boerse struck a deal to acquire NYSE Euronext in February, in a plan that would create the world’s No.1 exchange operator trading nearly every asset class and running operations in the United States and across Europe.

The deal would require a simple majority in the NYSE Euronext shareholder vote, but the backing of 75 percent of Deutsche Boerse’s stockholders.

NYSE Euronext and Deutsche Boerse said last week they do not expect to have to sell any major parts of the business as part of what is expected to be a tough European anti-trust review.

The deal would bring together Eurex and Liffe, giving the merged business a near-lock on European derivatives trading.

But the merger partners have said that the two venues handle the opposite ends of the interest-rate futures spectrum and therefore do not directly compete.

Niederauer, meanwhile, described a proposal by banks for NYSE Euronext to raise its minority stake in clearing house LCH Clearnet as a "very interesting opportunity for us" but said he did not expect it to affect the merger process.

"We will still migrate our derivatives business from LCH Clearnet to Eurex, but it does leave open the possibility of continuing to work together on the OTC (over the counter) side," he said.

FURTHER AFIELD

Looking at the global competitive situation, Niederauer played down expectations that the merged U.S.-European exchange group would seek an Asian acquisition but said he would look to partner more closely with the Hong Kong Stock Exchange.

"The listings market is already a global market. NYSE is No.1 year-to-date in terms of proceeds raised for IPOs, so we are competing just fine," he said.

"I view Hong Kong as an opportunity long-term to partner with them, because I do believe a lot of companies, if they think about listing in the West, (consider) a listing in the East."

But global mergers are still several years away, because exchanges in Asia either do not have an acquisition currency or have a valuation that "makes the math virtually impossible," said Niederauer.

"I am not in the camp that says there will be two or three exchanges and they will all be global years from now. I think there will be fewer, but I think that consolidation with Asia is five or 10 years, or even more, out in the future."

The NYSE Euronext-Deutsche Boerse merger "would put us in a position to pick our spots elsewhere," Niederauer said.

"We will be thoughtful about that. We think there will be lots of oportunities to invest in growth. We’re not going to rush it, we are not going to force the issue.

"And remember, because of the nature of the assets we manage in the portfolio, which are in some cases national treasures — in many cases the only one of its kind in an individual country — certainly nothing can be done that’s not entirely friendly.

"If anyone thinks that hostile takeovers are going to be the rule of the day in our industry, even if the economics are compelling, it doesn’t work."