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Antitrust Stock Set To Rise? Governments To Review Massive Stock Market Merger

Posted  February 17, 2011

The parent company of the New York Stock Exchange, NYSE Euronext, has agreed to merge with Deutsche Boerse, the operator of the Frankfurt stock exchange.  In an all-stock deal worth more than $10 billion, Deutsche Boerse will own a majority 60 percent of the new company, and NYSE Euronext shareholders will own 40 percent.  The merger, if approved, would create the world’s largest financial exchange operator and have headquarters in Frankfurt and New York.

The current president and deputy of NYSE Euronext, Duncan Niederauer, would serve as the new company’s CEO.  Reto Francioni, the current chief executive of Deutsche Boerse, would become chairman.

A merger of this magnitude will certainly face intense scrutiny by U.S. and European regulators, both because of its sheer size and also for its effect on the world’s financial markets.  The U.S. Department of Justice will review potential antitrust issues, and the Securities and Exchange Commission will also need to give the deal a green light.  In Europe, both the European Commission on antitrust, as well as the German state of Hesse’s Economy, Transport and Development Ministry will have to approve the merger.

The name of the exchange has yet to be decided, but is already becoming a political issue.  U.S. lawmakers, including New York State Senator Charles Schumer, have expressed concern that the deal may hurt New York’s leadership role in the financial world.  Schumer recently said his approval of the merger depends on whether New York gets top billing in the exchange’s new name.

The firms hope to complete the merger by the end of the year.

Tagged in: Antitrust Enforcement, International Competition Issues,