January 17, 2021

DealBook: Justice Dept. Approves Merger of NYSE Euronext and Deutsche Borse

The Justice Department approved on Thursday the proposed merger of NYSE Euronext and Deutsche Börse, but required the sale of the German exchange’s stake in Direct Edge Holdings within two years.

The proposed settlement offered by the Justice Department is the latest obstacle that NYSE and Deutsche Börse have hurdled in their nearly yearlong bid to create the world’s biggest stock exchange operator.

But the biggest problem, obtaining antitrust approval from European Union regulators, has not yet been fixed. The European Commission has reportedly told the two exchange operators that their proposed antitrust remedies don’t go far enough, according to Bloomberg News. Some analysts have speculated that the two companies may be forced to divest one of their major derivatives-trading platforms altogether.

While the Justice Department’s antitrust team required other asset sales, the biggest required was the sale of the 31.5 percent stake in Direct Edge, the fourth-largest stock exchange operator in the country. Deutsche Börse has owned the stake through its International Securities Exchange subsidiary since 2008.

The Justice Department’s primary concern was that should NYSE and Deutsche Börse be allowed to combine, that new colossus — together with the stake in Direct Edge — would own too much market share.

“Without the divestiture and other restrictions obtained by the Justice Department, a combined NYSE and Deutsche Börse entity could influence the actions of Direct Edge, and thereby lessen the zeal of an aggressive and innovative exchange competitor,” Sharis A. Pozen, the Justice Department’s acting antitrust chief, said in a statement.

Besides selling the stake within two years, Deutsche Börse must also provide a written plan outlining how it will step back from all corporate governance roles at Direct Edge. (The German company has special voting rights and the ability to name three board members.)

“We are very pleased to have received the approval of the DOJ, an important milestone on our path to completing our compelling trans-Atlantic combination,” Duncan L. Niederauer, NYSE’s chief executive, said in a statement.

Article source: http://dealbook.nytimes.com/2011/12/22/justice-approves-merger-of-nyse-euronext-and-deutsche-borse/?partner=rss&emc=rss

DealBook: One Vote Down, One to Go for N.Y.S.E. and Deutsche Borse Merger

Henny Ray Abrams/Associated PressThe floor of the New York Stock Exchange.

8:48 a.m. | Updated

With NYSE Euronext shareholders approving the merger with Deutsche Börse, the fate of the exchange merger lies across the Atlantic.

On Thursday, more than 65 percent of NYSE Euronext shareholders voted in favor of the deal, according to people briefed on the matter.

The odds of a deal increased sharply in May once the Nasdaq OMX Group and the IntercontinentalExchange withdrew their rival offer for the New York Stock Exchange operator.

Last month, both companies also agreed to pay out a special dividend to shareholders to help sweeten the proposal. Several proxy advisory firms, including Institutional Shareholder Services, recommended that shareholders back the merger.

Still, the deal is not done.

Deutsche Börse’s shareholders have about a week to tender their shares in support of the merger. The German exchange operator must win the support of 75 percent of shareholders by July 13. Thus far, about 11.11 percent of investors have tendered their shares, according to regulatory documents filed by Deutsche Börse.

People involved in the process say that even that is not too much of a problem, given that many investors are likely to tender their shares in the last few days before the deadline. Some shareholders might also have been waiting for the results of NYSE Euronext’s vote before lending their support.

Deutsche Börse can also ask for a deadline extension of up to two weeks, if necessary.

Spokesmen for NYSE Euronext and Deutsche Börse declined to comment.

In addition to the shareholder votes, another consideration for the deal is government approval. While American antitrust regulators seem likely to approve the merger, deal makers have said that persuading their European counterparts may be more difficult. Still, Deutsche Börse officials have said that they have made “significant progress” in working with regulators.

Article source: http://feeds.nytimes.com/click.phdo?i=6f2cc4491543c29fb36772e606ab66db

DealBook: German Exchange Doesn’t Plan to Sweeten NYSE Offer

Deutsche Börse does not plan to sweeten the terms of its merger with NYSE Euronext, because top managers of the German exchange operator are convinced that a rival bid has little chance of success, people with knowledge of the transaction said Monday.

Speaking a day after the NYSE Euronext board rejected a takeover offer that the Nasdaq OMX Group made in partnership with the IntercontinentalExchange, people close to the deal in Germany also disputed estimates that the competing offer is worth 20 percent more than a takeover by Deutsche Börse.

The estimates failed to take into account other costs, like the $355 million breakup fee that NYSE would owe to Deutsche Börse if it accepted another offer, said these people, who spoke on condition of anonymity because they were not authorized to speak publicly. Moreover, they said, there is a big risk that a tie-up with Nasdaq might never come to pass because of regulatory hurdles. For example, a combined Nasdaq and NYSE would have a practical monopoly on new listings, raising antitrust concerns.

On Sunday, NYSE Euronext rejected the Nasdaq bid, citing a long list of concerns, including the job cuts in New York and the amount of debt necessary to finance their bid. Debt rating agencies have said that Nasdaq’s credit rating would suffer from the strain of financing the $11.3 billion offer.

Executives at NYSE Euronext and Deutsche Börse have been talking about a merger off and on for more than two years, giving them a huge head start on seeking the numerous regulatory approvals that will be required. Deutsche Börse planned to submit a draft of an offer to its shareholders to Germany’s bank regulator on Tuesday.

The filing is an important step in making it possible for shareholders of both companies to vote on the deal in July. NYSE and Deutsche Börse plan to complete the merger by the end of the year.

The head start also means that the two companies have already dealt with difficult questions like who will run the combined company. Reto Francioni, chief executive of Deutsche Börse, would be chairman, and Duncan Niederauer, chairman of NYSE Euronext, would be chief executive.

NYSE and Deutsche Börse have a binding contract, while the Nasdaq offer is what Mr. Niederauer on Sunday called a “loosely worded proposal.”

However, the two companies have not agreed on a name for the new entity. They said that, in any case, they will preserve the NYSE Euronext and Deutsche Börse brand names.

Article source: http://feeds.nytimes.com/click.phdo?i=50fe8ed0e92362ea9c576a6cd4cd197b