By Brian Parkin
Dec. 6 (Bloomberg) -- Deutsche Boerse AG, Europe’s largest exchange by market value, is holding merger talks with NYSE Euronext, the world’s largest owner of stock markets, Der Spiegel magazine reported, without citing anyone for the information.
Deutsche Boerse Chief Executive Officer Reto Francioni presented a 13-page merger plan to the Frankfurt-based exchange’s board in late November, the German weekly reported in a pre- release from its next edition. The enlarged company would be led by Francioni and would have an eight-person board and an 18- member directorate, Spiegel said.
“We have nothing to announce and, as a general policy, don’t comment on speculation,” Deutsche Boerse spokesman Ruediger Assion said today in an e-mailed statement to Bloomberg News. Antoinette Darpy, a Paris-based spokeswoman for NYSE Euronext, declined to comment on the report to Bloomberg.
A combination of Deutsche Boerse and New York-based NYSE Euronext would allow the two exchange operators to cut costs as the rout in global stock markets this year has led to a decline in the volume of shares being traded. Alternative trading systems, such as Chi-X Europe Ltd., Bats Trading Inc. and London- based Tuquoise, are also eating into exchanges’ revenues.
Nasdaq OMX Group Inc., which has gained business from NYSE Euronext in the U.S., is also pushing deeper into European equities and U.S. options while sharing technology across different markets to reduce expenses.
Dutch Holding Company
Deutsche Boerse’s own shares have dropped 63 percent this year, valuing the company at 9.8 billion euros ($12.5 billion). That compares with the 48 percent retreat in the Dow Jones Stoxx 600 Index. NYSE Euronext stock has declined 76 percent, valuing the company at $5.7 billion. The S&P 500 Index has fallen 40 percent in 2008.
The two exchange operators would create a Dutch-based holding company as a vehicle for the combination, Spiegel said. The new company would run its share trading from New York and have units in Paris and Frankfurt, the magazine said. The derivatives business would be located in Frankfurt, it said.
Deutsche Boerse is part-owner of Eurex, Europe’s largest futures market and bought New York-based International Securities Exchange Holdings Inc. last year.
Trading Volume Decline
German stock-exchange trades dropped 49 percent to 137.4 billion euros in November from a year earlier, Deutsche Boerse said Dec. 1. A total of 114.5 billion euros was traded on Germany’s Xetra electronic-trading system and on the Frankfurt floor, a 50 decline from last year.
New York-based Nasdaq in February extended its global reach by purchasing Sweden’s OMX AB, which runs bourses in seven European cities including Helsinki and Copenhagen. In September, Nasdaq introduced a trading platform to expand beyond Nordic markets and compete against London Stock Exchange Group Plc, NYSE Euronext and Deutsche Boerse.
To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.
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