Deutsche Boerse, NYSE Merger Hits Snags

Senator Charles Schumer, an influential member on the Senate Banking Committee, has reversed his position on the NYSE Euronext and Deutsche Börse AG merger on the issue of who should lead the company. As details came out about the merger last week, the scare among investors was the fact that Deutsche Börse will now own the majority stake of this stock exchange. Initially, Senator Schumer indicated that the managerial components of the company would be handed over to an NYSE team headed by the new CEO Duncan Niederauer. Now Schumer’s spokesman Brian Fallon has released a statement saying that Senator Schumer had not intended to convey any “greater knowledge of the arrangement beyond Niederauer as CEO.”

The fear is that the comments by Schumer could stall the deal from going through as the merger is being sold in Germany as a German takeover of the NYSE or a “merger of equals” as indicated by Reuters. While little commentary on the issue has been made by US officials, other than the positives statements made by New York Mayor Mike Bloomberg and U.S. Representative Carolyn Maloney who is also of New York. However, internationally, French Economy Minister Christine Lagarde has expressed concern over what impact the merger could have on the broader global market.

According to the Wall Street Journal, the apprehension is compounded by the London Stock Exchange’s merger with Canadian exchange operator TMX Group Inc. Peter Randall, the chief executive of Equiduct, indicated that the deals may lead to more competition in the exchange industry. Some investors have taken these mergers to be a sign of the global equities markets being controlled by two super-exchanges. However, Simmy Grewel, infrastructure analyst at Aite Group, stated that the global equities market is unlikely to be affected by the anticipated mergers.

Sources:

1. http://online.wsj.com/article/BT-CO-20110213-704019.html

2. http://www.reuters.com/article/2011/02/14/us-nyse-deutscheboerse-schumer-idUSTRE71C1V420110214

3. http://www.bloomberg.com/news/2011-02-11/nyse-deutsche-boerse-merger-is-free-with-derivatives.html