The proposed merger between NYSE Euronext and Deutsche Börse has taken another small step towards completion with the approval of the antitrust division of the United States Department of Justice (DOJ).
The DOJ gave its consent to the deal, which would create Europe’s largest derivatives trading business, on condition that Deutsche Börse divest itself of its minority stake in US exchange Direct Edge. Deutsche Börse holds a 31.5% stake in the US exchange through IntercontinentalExchange, which is wholly owned by Deutsche Börse’s derivatives business Eurex. The DOJ said that it would allow two years for a potential NYSE Euronext-Deutsche Börse combination to make the sale.
However, completion of the NYSE Euronext-Deutsche Börse deal is still subject to approval by the European Commission. The two exchanges have made a series of concessions in recent months to keep the deal moving forward, as concerns persist that the proposed union would effectively create a European monopoly in listed derivatives trading.
Most recently, the exchanges proposed that trading and clearing fees for derivatives contracts traded on Eurex and NYSE Euronext’s Liffe derivatives platform could be frozen for three years. They also agreed to extend the offer of open access to Eurex Clearing, which was heavily restricted in the initial concessions made by the two firms, and the divesture of both exchanges’ single equity derivatives businesses, with the acquirer also receiving an option to access Eurex Clearing for single equity derivatives products.
A combined NYSE Euronext-Deutsche Börse would have a market capitalisation of over US$9 billion. The deal is intended to provide the two companies with cost synergies of US$798 million, with US$580 million in direct cost savings and US$218 million in projected new revenue opportunities.
A final EU decision on the deal is expected by 9 February 2012.