Regulators block giant bourse merger on competition worries

Deutsche Boerse and NYSE Euronext, which unveiled the plan to create the world’s biggest stockexchange as early as February last year, said they would now unwind the deal.

The EU blocked the merger because of fears over the combined entity’s potential grip on more than 90 percent of the listed derivatives market in Europe, which would make it hard for new players to compete.

Deutsche Boerse and NYSE Euronext had refused to sell either the German operator’s Eurex derivatives market operator or the U.S. company’s London-based futures exchange Liffe to address such concerns.

NYSE said it would return $550 million to shareholders via a share repurchase program and seek to grow its derivatives business.

“While we viewed the merger as a way to accelerate our plans, our existing business model was always central to our strategy,” NYSE Euronext Chief Executive Duncan Niederauer said. “We will also take advantage of our financial strength to capture opportunities for growth in derivatives, and through our new initiatives, including technology services, NYSE Liffe US/NYPC and post-trade services.”

The Hessian economics ministry, Deutsche Boerse’s home regulator in Wiesbaden, Germany, had said on Tuesday that the exchanges had not eased its legal concerns over the deal. The ministry was planning to issue a decision after the Commission’s ruling.

U.S. regulators approved the merger in December last year on condition the exchanges sell a minor asset.

In the past year, the sector has seen three large deals fail for different reasons.

Nasdaq and IntercontinentalExchange’s bid for NYSE Euronext was rejected by the U.S. Department f Justice, London Stock Exchange’s takeover of TMX Group was rejected by shareholders of the Toronto Stock Exchange operator, and Singapore Exchange’s bid for Australia’s ASX was stopped by the Australian government.