Deutsche Boerse Challenges 'Black Day' Rebuff of NYSE Deal
Deutsche Boerse's continued contest of its NYSE merger blockage is an attempt to undo key headwinds. The move challenges the legal reasoning of EU and will do little to revive the proposed merger; however, its insistence to cut mergers highlights the company's hope to move from Europe as regulators weigh on M&A. In its appeal, Deutsche Boerse insists that analysis of efficiencies, customer benefits and divestitures in the deal -- which led to an anticompetitive finding - were done incorrectly.
In the past two years, Bloomberg calculates that regulators have blocked $37 billion in exchanges deals.
Now analysts expect deals to be done, but at a much smaller size. "Scale remains a competitive advantage for exchanges, however going forward we expect management teams are more likely to drive new operating leverage through smaller niche acquisitions that complement existing Product/ technology portfolios rather than transformational M&A to build global footprint across borders," wrote Goldman Sachs analyst Daniel Harris in February.
To be seen is whether deals will reemerge after a frenetic 2011. Last week Hong Kong Exchanges and Clearing bought the London Metal Exchange for over $2 billion.
Alexander of KBW highlights that GFI Group (GFIG) , Investment Technology Group (ITG) , Interactive Brokers ( IBKR ) and MarketAxess ( MKTX ) could benefit from consolidation in the space, in a June note to clients.
-- Written by Antoine Gara in New York