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Deutsche Boerse Gives Up Chase For Euronext

by Ulrika Lomas, Tax-News.com, Brussels

17 November 2006


Deutsche Boerse has announced that it has pulled out of the bidding for pan-European exchange operator Euronext, potentially clearing the way for the latter's merger with the New York Stock Exchange.

In a statement, the German stock exchange revealed that it had abandoned the merger because of the unwillingness of Euronext's board to engage in talks.

"Deutsche Boerse continues to believe that a combination of exchanges can only be successful if both sides willingly work together," the company said.

The statement also cited recent share price developments, and said that the transaction "would no longer create value for Deutsche Boerse shareholders".

Deutsche Boerse CEO, Reto Francioni stated that: “We are convinced that, in our industry, mergers can only be successful with the support of both management teams and the industry. We have invested time and commitment but it is part of our responsibility to recognize when further effort doesn't make sense.”

He concluded that: “External growth is an option but not a necessity for Deutsche Börse. Based on our very strong position in the industry, we will continue our successful organic growth path. Nevertheless, we expect to take an active role in the consolidation process in our industry in Europe and beyond.”

A possible link-up between Euronext, which operates exchanges in Paris, Brussels, Amsterdam, Lisbon and London, and the German exchange was favoured by European politicians, who fear that a deal with the NYSE will lead to the importation of stricter regulations into Europe.

NYSE and Euronext struck an agreement to combine their respective businesses in May 2006. The new group is likely to globally redefine the marketplace for trading cash and derivatives securities and the partnership would create the world’s largest and most liquid securities marketplace, with a combined market capitalisation of around EUR15 billion ($20 billion).

Shareholders will vote on a merger between Euronext and the NYSE Group at an extraordinary general meeting in December.


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