NYSE-Deutsche Borse Makes Concessions

Terry Flanagan

The mega-merger between NYSE Euronext and Deutsche Borse will look to stay on course as the parties offer up concessions to regulators.

NYSE and Deutsche Borse have submitted a remedy proposal to the European Commission’s Directorate-General for Competition, outlining certain concessions made in a move to alleviate the concerns of the authorities regarding their merger. Chief among the proposed remedies are moves to divest their overlapping businesses.

“With respect to European single equity derivatives, the notifying parties have proposed to divest the portions of their respective businesses in which they overlap,” said the parties in a joint statement. “NYSE Euronext would divest its pan-European single equity derivatives business, including Bclear, except the options businesses in its home markets, where Deutsche Borse would divest its respective business. This remedy addresses DG Competition’s stated concerns in the area of single equity derivatives.”

The merger partners also said that they will give rival venues access to Eurex Clearing, their Germany-based derivatives clearing house.

“Geographic consolidation will ultimately end in cost-savings and efficiencies for customers, which will be good for continuity,” said Bryan Johanson, managing director with NYSE Euronext at a panel discussion late Thursday, prior to the concession announcement.

With the timing of the concession submission on late Thursday, the competition commission will extend the review period by an additional 15 working days from the original Dec. 22. A decision on the merger can now be expected by Jan. 23, 2012, with the parties expecting to close on the deal in the early part of the year.

NYSE and Deutsche Borse agreed to their $17.7 billion merger in February, with shareholders approving the deal in July. Regulators outlined their objections in a statement in early October, with oral hearings held later that month. The companies expect to save as much as $3 billion in capital requirements through the deal, as well as reduce any duplicative infrastructures and operations.

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