In what comes as absolutely no surprise, the EU officially said "Nicht!" today to the long proposed merger of the New York Stock Exchange/Euronext (NYSE Euronext) and Germany's largest securities exchange, the Deutsche Börse. The reason, also obvious -- the EU said it would have created a near monopoly thwarting the competition, especially in the European derivatives market.
Word that regulators of the European Union had preliminarily rejected the proposed merger was leaked last month. Therefore, today's announcement was expected. A recommendation to prohibit the $17 billion combination had been widely anticipated after EU antitrust officials continued to show concern over the two exchanges combined power in the derivatives market.
In response, NYSE Euronext announced today that in light of the decision the companies are in discussions to terminate their merger agreement.
In its statement, NYSE Euronext said it would now focus on a standalone strategy that has delivered strong growth and diversification of its core businesses and that it would leverage its financial strength to return capital to shareholders. In that regard, NYSE Euronext announced its intent to resume a $550 million share repurchase program following the termination of the merger agreement and after the release of its fourth quarter and 2011 year-end results which will be announced on February 10th.
Jan-Michiel Hessels, NYSE Euronext Chairman said, “Our merger would have created a high standard for transparency, stability and efficiency in the global capital markets, and we proposed significant and tangible remedies designed to address the European Commission’s concerns with the transaction. But as we made clear throughout this process, we would not agree to any concessions that would compromise or undermine the industrial and economic logic of the proposed combination."
Hessels added that “while we are disappointed and strongly disagree with the EU decision, which is based on a fundamentally different understanding of the derivatives market, it is now time to move on."
Duncan Niederauer, NYSE Euronext Chief Executive Officer said: “We will also take advantage of our financial strength to capture opportunities for growth in derivatives, and through our new initiatives including technology services, NYSE Liffe US/NYPC and post-trade services. And, as always, we will continue the success we have had in optimizing the business through continued cost discipline and operational efficiency."