VARIOUS: D.Boerse says won't join Euronext/NYSE tie-up

A group of seven leading investment banks said on Wednesday (November 15) they planned to create a new pan-European equity trading platform next year in a move that will compete with Europe's stock exchanges. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS said in a statement they will form a new company with an independent management team to develop the platform. The announcement confirmed what a source familiar with the matter had told Reuters late on Tuesday. Later on Wednesday Deutsche Boerse AG dropped its bid for Euronext, clearing the way for a transatlantic merger between New York Stock Exchange operator NYSE Group Inc. and Euronext. Deutsche Boerse, which had been pursuing a pan-European tie-up for the best part of this year, said a deal that would have been supported by both sides was no longer feasible. The management of Euronext, which runs the Paris, Amsterdam, Brussels and Lisbon stock exchanges, has repeatedly rebuffed the Frankfurt stock exchange operator in preference for the NYSE's bid. Shares in the London Stock Exchange, Deutsche Boerse and Euronext all fell on Wednesday after the German exchange withdrew its bid for Euronext and as a group of major international banks unveiled plans for a rival trading platform. Chief Executive Reto Francioni told reporters on Wednesday, "We are now abandoning the Euronext project," he said He said however that Boerse would remain open to another deal with Euronext, but it would not make the first move. "There were a whole range of reasons," Francioni said. "Let me for example mention the development of prices but also the reaction in Paris. We made very clear which conditions we set to join this cooperation," he added. "There was not enough reaction, also from the stakeholders, from the shareholders, from Euronext. There are other reasons too. I think the complete package based on the general situation is clear: we are abandoning this," said Francioni. He also told reporters plans to create a pan-European equity trading platform next year by seven leading investment banks were a serious effort but not specifically aimed against Deutsche Boerse. Euronext had no immediate comment. The news came just hours after a group of seven leading investment banks said they planned to create a new pan-European equity trading platform next year to compete with Europe's stock exchanges and reduce the cost of buying and selling shares. Francioni rejected an earlier offer from NYSE and Euronext to join their planned tie-up, but said Deutsche Boerse remained open to another deal with Euronext. Both Deutsche Boerse's and NYSE's bids for Euronext were a combination of stock and cash, meaning that the value of each fluctuated with the prices of shares in Deutsche Boerse and NYSE, respectively. Euronext's share price was also a factor. When Euronext's management agreed in early June to team up with NYSE, the U.S. bid was worth around 10 billion U.S. dollars (USD). NYSE shares have risen almost 50 percent since then, while Deutsche Boerse's are up by around 25 percent. Francioni said Euronext's shares had risen so much that a higher bid from Deutsche Boerse would no longer have been attractive for the German company's shareholders. The London Stock Exchange (LSE) is the second-largest stock exchange in the world and Europe's biggest share market. In March 2006 it rejected a takeover bid of 4.2 billion USD made by the U.S.-based Nasdaq Stock Market Inc .. The LSE posted a sharp rise in first-half operating profit, lifted by new listings and growth in electronic trading. Europe's largest share market by equity turnover said last week that operating profit for the six months to Sept. 30 rose 60 percent to 81 million pounds (155 million USD), in line with analysts' expectations. Deutsche Boerse, the German securities market operator in Frankfurt, is the world's sixth largest stock exchange with a market capitalisation of 13 billion euros (17 billion USD) and also runs the Eurex financial derivatives exchange as well as market clearing and custody business Clearstream. Earlier this month Deutsche Boerse posted a 42 percent year-on-year rise in third-quarter earnings before interest, tax and amortisation (EBITA) to 255 million euros (324 million USD). Euronext, which runs the Paris, Amsterdam, Brussels and Lisbon stock exchanges, has agreed to a merger with NYSE Group Inc., which operates the New York Stock Exchange. The new NYSE Euronext would have a market capitalisation of about 15 billion euros (20 billion USD).

ITN Source | November 15, 2006

Tags:. .bids. .unveiled. .repeatedly. .custody. .sharp