The $8.2 billion merger between
NYSE Euronext Inc.
) has gained traction with the final verdict of unconditional
approval from the European Union Commission (EUC) on Jun 24.
EUC gave its wholehearted support to the merger and
disregarded any antitrust concerns. The regulators believe that
the acquisition of Europe's second-largest derivative exchange -
NYSE Liffe will not raise any anti-competitive business model, as
no significant businesses overlapped.
All Concerns Addressed
Announced in Dec 2012, the aforementioned merger deal was
being scrutinized by the EUC. Particularly, the regulators
studied the effect of the merger on agricultural and soft
commodity derivatives along with the U.S. equity derivatives.
Meanwhile, the actions taken by IntercontinentalExchange in Mar
2013, including the allowances and plans to build product
committees as well as capping trading fees on soft commodities
such as coffee, cocoa and sugar, at least for the next 5 years,
alleviated the regulators' concerns.
Consequently, the merger came clear in Europe and received a
green signal, making the NYSE- IntercontinentalExchange merger
the third largest global exchange, only behind the leading Hong
Kong Exchanges and Clearing and
CME Group Inc.
). The merger will also help IntercontinentalExchange penetrate
deeper into the trading of interest rate futures, thereby gaining
strong operating and competitive leverage globally.
Previously in 2011, the EU regulators had rejected the merger
deal between NYSE and Frankfurt-based Deutsche Boerse based on
such antitrust 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
The U.S. to Wave Green Flag
However, now that the shareholders of both the companies along
with the EUC have backed the deal, NYSE and
IntercontinentalExchange await the final approvals from financial
regulators within the U.S., including Euronext College of
Regulators as well as the U.S. Securities and Exchange Commission
(SEC), among others. The positive turn of events is likely to
lead to a timely culmination of the acquisition of NYSE, which is
scheduled by the end of this year.
Following the announcement of approvals in Europe, the share
prices of both NYSE and IntercontinentalExchange witnessed an
uptick of 1.3% and 1.8%, respectively, on Tuesday.
While IntercontinentalExchange, NYSE and CME Group carry a
Zacks Rank #3 (Hold), another outperformer of the exchange
CBOE Holdings Inc.
) carries a Zacks Rank #1 (Strong Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
CME GROUP INC (CME): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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