Gasparino: CME Considering Hostile Bid for NYSE

Monday, 14 Feb 2011 03:48 PM

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CME Group is reportedly about to jump in the fray of a fast-moving merger of the NYSE Euronext and Germany’s Deutsche Boerse. Charles Gasparino at Fox Business, citing sources, reports that the CME is working on a hostile bid for the U.S. firm, which operates the New York Stock Exchange.

The merger expected to be announced Tuesday would have turned the NYSE Euronext into a German company.

A combined NYSE and Deutsche Boerse would become the world’s largest stock exchange, worth an estimated $24 billion.

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An index board at the Frankfurt Stock Exchange.
The CME has refused to deny speculation over the deal, Gasparino said, adding that there is a chance of a hostile bid for NYSE Euronext.

CME already operates the Chicago Mercantile Exchange, Chicago Board of Trade, and the New York Mercantile Exchange.

“The CME is huge, particularly in derivatives and options, and they are clearly, right now, sources tell us, discussing a strategic response to this deal,” Gasparino said.

“Bankers are telling the Fox Business Network that the CME may pursue a hostile bid for the New York Stock Exchange. Bankers are telling me that this is not out of the question.”

If a hostile bid is made, expect the merger plan to screech to a halt, Gasparino said.

“That bid would really disrupt this deal, because you have lots of oversight from congressional committees if this hostile bid goes in there,” Gasparino said.

Another possibility is that the Nasdaq Exchange joins the CME in a bid for NYSE Euronext, Gasparino said.

The German takeover plan was already in for a tough review, since it would move a major portion of U.S. financial markets out of the United States, raising questions about government oversight.

A CME or joint CME-Nasdaq bid would keep the exchange in U.S. hands but possibly concentrate too much trading under one roof, raising competition concerns, Gasparino noted.

Meanwhile, Reuters reported earlier Monday that Deutsche Boerse and NYSE Euronext have an agreement in principle on the broad outlines of the merger, but are side-stepping thorny political issues, two sources familiar with the plan said.

Last week, the exchanges revealed the first details of a merger plan that would give Deutsche Boerse shareholders about a 60 percent stake, and name NYSE Euronext's head Duncan Niederauer as chief executive.

The two are hammering out a framework deal which focuses on functions and personalities, with Deutsche Boerse Chief Executive Reto Francioni slated to be chairman.

Negotiations over a name, and where to locate various operations across the two continents, highlight some of the difficulties in bringing together companies that are both operationally complicated and symbols of national pride, Reuters reported.

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