Deutsche Börse has dropped out of the bidding for Euronext, paving the way for Euronext’s planned transatlantic merger with the New York Stock Exchange [NYSE] to proceed as planned.
Euronext long ago reached an agreement to merge with the NYSE, only to see the Deutsche Börse step in with an alternative offer. At the time, the Deutsche Börse offer had a higher dollar value, and there was pressure from politicians and shareholders alike to consider the German exchange’s bid. The recent and startling rise in NYSE Group's (NYSE:NYX) stock price, however – the stock is up more than 50 percent over the past quarter – has turned the tide, and the Deutsche Börse clearly saw that it couldn’t compete. Now, the only thing standing between the NYSE and Euronext is the final sign-off of the regulatory authorities.
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The Euronext merger will give the NYSE a foothold in Continental trading, not only for equities, but for exchange-traded funds (ETFs) as well. Euronext’s “NextTrack” program had a 23.9 percent share of the European ETF market in September, according to Morgan Stanley Research, with trading volume up a healthy 64 percent from year-ago levels.
The Deutsche Borse’s decision to withdraw had widespread ripples throughout the exchange sector yesterday. Shares of Nasdaq Stock Market, Inc. (NASDAQ:NDAQ), for instance, rose on speculation that it could see an offer from the Deutsche Börse. The move helped pushed the Chicago Board Options Exchange’s U.S.-based “Exchange Index [EXQ]” to a new all-time high.