NYSE, Deutsche Boerse in advanced merger talks
Deutsche Boerse and NYSE Euronext, two of the world’s largest exchange operators, said Wednesday they were in “advanced merger discussions,” but no agreement had been reached
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NEW YORK — Deutsche Boerse and NYSE Euronext, two of the world’s largest exchange operators, said Wednesday they were in “advanced merger discussions,” but no agreement had been reached.
The deal, if agreed, would give Deutsche Boerse shareholders 59% to 60% ownership, and NYSE Euronext shareholders 40% to 41%, the companies said in a joint statement.
Here’s what the analysts say:
DIEGO PERFUMO, ANALYST, EQUITY RESEARCH DESK, GREENWICH, CONNECTICUT
“Competition in equities is intensifying — London has lost 40% (of equities trading)”
“One of the ways to get efficiencies is you find cost synergies- you merge.
“Somebody has to take the Spanish exchange — CBOE will be consolidated”
“The U.S. has been protective of this market- we will see how regulators react.”
PETER BOTTINI, EXECUTIVE VICE PRESIDENT OF CHICAGO-BASED ONLINE BROKERAGE OPTIONSXPRESS
“The potential size of the deal is surprising. If true, this could be a very big step in the direction of consolidation in the exchange space. A consolidation of ISE, NYSE Arca and NYSE AMEX options venues would create the dominant player in the U.S. options space.”
“I think CBOE Holdings shares is up on the news. CBOE is an attractive candidate to be acquired right now with their proprietary products.”
ADRIAN CRONJE, CHIEF INVESTMENT OFFICER AT BALENTINE
“I’m astounded this merger that was dismissed two years ago is now back. At the time, the conventional wisdom was that it would be difficult to do a merger of equals and there were not obvious synergies in the businesses. But I think this indicates the alternative trading platforms that are out there must be eating into their business faster than people realize.”
ED DITMIRE, MACQUARIE SECURITIES:
“That’s as big as deals get.” “Clearly Deutsche Boerse would be the buyer. It would be a stretch to call it a merger of equals.” “It would be complicated — there would be competition concerns, a list of regulators with a purview over one or the other of these businesses as long as your arm.”
“It would be a relatively challenging one in terms of the typical exchanges hurdles of nationalism. I don’t think a deal of this nature is one that would likely be struck or closed quickly.”
“CBOE is probably an obvious pick in terms of, ’if it’s not a consolidator, it’s probably a target.’”
“One that doesn’t get as much attention is Nasdaq which has real strategic significance as the largest provider of exchange technology in the world.”
“Nasdaq would be pretty attractive to a wide range of suitors… I could see one of the large Asian exchanges that use their technology, someone like a Singapore.”
“They (DB and NYSE Euronext) would have cost synergies- they do a lot of the same things but in different areas of the world” “But do European futures but in different products, both do equities but in different areas of the world.”
DOUG ROBERTS, CHANNEL CAPITAL RESEARCH.COM
“You’re probably going to see much more of this. Right now you’re starting to see global markets trading so what happens is you are starting to see synergies that are united across multiple markets. You saw this before the downturn in 2008 and then it was interrupted because people were unsure what the future is, people were unsure about whether they could get financing.”
“The increasing regulation gives the exchanges an advantage. Before everybody was concerned about dark pools, so more and more if you are starting to look towards transparency that tends to lend itself to more of an exchange structure. And since a lot of it is computerized it’s not like you have to add up overheads.”
“This may be heavily orientated towards the developed markets because in the undeveloped ones people aren’t sure what the rules are.”
JOE SALUZZI, THEMIS TRADING
“Still halted, Deutsche Boerse was halted as well. Obviously, the stock was very active. Looked like the options were pretty active prior to. Who knows. These guys, they fragment the market, the break a glass and then they try to put it back together and break it again. Who knows. I don’t know what they are up to, I don’t want to speculate. But if it’s a merger — hey! Wonderful. “The bottom line is this, the business model of the exchange has changed, particularly over the last five to 10 years. They are no longer a utility, investor protection type situation for listings and all that. They are essentially an electronic trading mechanism now, and they are all for profits. So, bottom line, great put it back together, break it up later. Fantastic. It doesn’t make sense, who cares? But whatever. Nasdaq now has to come out and do something right? Because they can’t be left out. Nasdaq is going to buy the Bangladeshi stock exchange.”
© Thomson Reuters 2011
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