According to Reuters, the antitrust regulators of European
Union (EU) appear to gain confidence in this $8.2 billion merger
NYSE Euronext Inc.
While the deal was announced in Dec 2012, the EU regulators
scrutinizing it were apprehensive regarding the anti-competitive
business model of the merger. This also includes the acquisition
of Europe's second-largest derivative exchange - NYSE Liffe.
Previously in 2011, the EU regulators had rejected the merger
deal between NYSE and Frankfurt-based Deutsche Boerse based on
such concerns. According to them, the merger provided ample scope
for a monopolistic model in the future, primarily with the fusion
of NYSE Liffe and Deutsche Boerse's Eurex derivative markets.
Hence, to alleviate these qualms, IntercontinentalExchange
laid out certain discrete allowances and plans to build product
committees in March this year. The company also resolved to limit
its trading fees on soft commodities such as coffee, cocoa and
sugar, at least for next five years. Given the modifications, the
EU regulators appear to have no objection over the merger.
The EU regulators are slated to provide the final verdict by
Jun 24 and are expected to give a wholehearted green signal to
the merger. With the approval in EU, IntercontinentalExchange
will achieve another milestone following the receipt of approval
from the shareholders of both the companies early this month.
These positive turn of events could lead to timely culmination of
the acquisition of NYSE, which is scheduled by the end of this
Post acquisition, the 220-year old NYSE will own 36% in the
12-year old IntercontinentalExchange. Moreover, the latter aims
to leverage NYSE's efficiencies and global presence productively,
thereby positioning it well to tap growth opportunities and bring
forth a strong competitive advantage globally.
While IntercontinentalExchange and NYSE carry a Zacks Rank #3
(Hold), other outperformers of the exchange industry include
CBOE Holdings Inc.
MarketAxess Holdings Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
MARKETAXESS HLD (MKTX): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
To read this article on Zacks.com click here.