NYSE Chief Sees Other Options If Deutsche Boerse Deal Fails
January 30, 2012, 2:11 AM ESTBy Nandini Sukumar and Erik Schatzker
(Adds comments on consolidation from fourth paragraph.)
Jan. 27 (Bloomberg) -- NYSE Euronext, awaiting a final decision from the European Union on its merger with Deutsche Boerse AG, has other acquisition opportunities, Chief Executive Officers Duncan Niederauer said today.
There are “lots of assets that are available right now,” Niederauer said today in an interview with Bloomberg Television in Davos, Switzerland. “Everyone will take a look at LME, LCH.Clearnet is an important asset,” he said, declining to comment on whether NYSE would make an offer.
The London Metal Exchange, founded 135 years ago, will consider bids on Feb. 23 that may lead to a takeover of the world’s biggest metals bourse. LCH.Clearnet Group Ltd., owner of the world’s largest swaps clearinghouse, is holding exclusive talks with London Stock Exchange Group Plc after previously drawing interest from NYSE Euronext.
“We think the post-trade space is important, we think the technology space is important,” Niederauer said. “You’re going to see us focus most of our attention in those arenas, consistent with what we’ve articulated the standalone strategy to be before.”
European antitrust regulators, led by European Union Competition Commissioner Joaquin Almunia, are likely to formally recommend next week against the merger of NYSE Euronext and Deutsche Boerse, the last remaining deal after a year of failed attempts. That would set the stage for a vote by the full European Union, which isn’t bound by Almunia’s advice but usually takes it.
Blocked Mergers
Should the takeover be blocked, it would mean $37 billion in exchange mergers announced globally since October 2010 didn’t close, according to data compiled by Bloomberg, the most for any 12-month period. Russia’s Micex Exchange acquired RTS Stock Exchange on Dec. 19 for $1.5 billion, according to data compiled by Bloomberg. Exchanges completed $28.7 billion of deals in 2007 and 2008.
“There are other assets around the world,” Niederauer said. “Put them in the ‘tuck-under’ or ‘bolt-on’ acquisition category. I think that’s what a lot of the activity is going to look like in the next year or two. I don’t think it’s transformational.”
Executives have embraced consolidation after the number of U.S. and European trading venues increased by about 50 in the past decade, driving down profitability.
Singapore, Australia
Singapore Exchange’s $8.3 billion bid for Sydney-based ASX was blocked in April after lawmakers rejected losing control of the venue to foreigners. London Stock Exchange Group Plc ended its bid for TMX in June after failing to get enough shareholder support for the $3.1 billion deal.
“This is an industry that clearly lends itself to consolidation,” Niederauer said. “You will see a wave of bolt- on acquisitions” if the big deals get blocked, he said.
Almunia said earlier today that NYSE Euronext and Deutsche Boerse’s planned merger of trading and post-trading operations would cause “serious” concerns. Almunia’s team at the European Commission told the two companies it will veto the deal to create the world’s largest exchange because it would monopolize derivatives trading in the region, two people familiar with the matter told Bloomberg News in December.
Almunia has promised a ruling on Feb. 1, almost a year after the exchanges announced their proposed agreement on Feb. 15 last year.
“It’s been a long journey for sure,” Niederauer said. “I still hope it won’t” fail.
--Editors: Joanna Ossinger, Michael P. Regan
To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net or @NandiniSukumar on Twitter; Erik Schatzker in New York at eschatzker@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
