In a positive turn of events, the shareholders of both
NYSE Euronext Inc.
) have given the green light for the smooth progress of the
In Dec 2012, ICE agreed to buy out NYSE for the current value
of about $9.7 billion. While initially the deal was scheduled to
close in the first half of 2013, delays in regulatory and other
approvals deferred the culmination period to the end of this
However, 99% of the voters, who account for 64% of the shares
outstanding of NYSE, approved of the merger deal. Consequently,
the 13-year old ICE has moved one step ahead to take over
220-year old NYSE through the shareholder approval.
Although NYSE enjoyed a dominant position in the US for most
of its life, intense competition and market volatility in the
past few years have shrunk the company's market share from over
90% to less than 30% now. Hence, a merger at this juncture
appears feasible for this business.
Overall, the merger benefits both the parties with incremental
cost efficiencies, business expansion and competitive edge.
Meanwhile, ICE plans to keep the NYSE brand post merger.
Regulatory Approval a Major Hurdle to Pass
Nevertheless, the deal is yet to sail through the high tides
set by regulators in both the US and Europe. The European
regulators have already shown concern over the interconnection of
the commodities business of both the parties that could deter
While a roar of merger and acquisition activities took place
in most of 2011 and 2012, hardly any of them saw the light due to
regulatory snags, reflecting the significance of the regulatory
processes. In the past, the London Stock Exchange failed to take
over Canada's TMX Group and Singapore stock exchange was also
unable to acquire the Australian stock exchange owing to
opposition from regulatory authorities in both the countries.
Even Frankfurt-based Deutsche Boerse's attempt to take over
went south due to regulatory hurdles.
Nasdaq OMX Group Inc.
) and ICE premium-priced joint takeover bid was also repeatedly
rejected by NYSE on multiple antitrust issues.
Hence, while the shareholders of both the companies have
showed confidence in the merger, it would be too early to predict
the successful culmination considering the regulatory
While NYSE carries a Zacks Rank #3 (Hold), ICE sustains a
Zacks Rank #2 (Buy). Another outperformer of the exchange
CBOE Holdings Inc.
), which carries a Zacks Rank #1 (Strong Buy). However, Nasdaq
holds a Zacks Rank #4 (Sell).
CBOE HOLDINGS (CBOE): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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