The proposed $8.2bn acquisition of NYSE-Euronext (NYX) by the IntercontinentalExchange (ICE) has received clearance from the European Commission (EC) after the body ruled the two "are not direct competitors in the markets concerned and would continue to face competition from a number of other competitors".
The presence of the rival CME Group is thought to have reassured the EC that enough global competition would remain in the derivatives marketplace if the deal was to go ahead. Any link-up would give ICE control of the London-based Liffe market, which is Europe's second biggest derivatives market after Eurex, which is owned by Deutsche Boerse, and is the leader in the European arena ensuring enough competition on this side of the Atlantic. Eurex recently migrated to a new trading platform.
The activities, clearing structure and operations of NYX and ICE across various commodity groupings and derivatives-based hedging movements do not overlap sufficiently to negate a takeover, concluded the EC after its investigation. The group’s activities in foreign exchange (FX), bond trading and other markets also attracted no concerns. But the proposed takeover still needs final approval from the US Securities and Exchange Commission (SEC) and other regulators before it can proceed.
The rationale behind the deal is clear as it will cut NYX’s reliance on declining equity markets and could save the combined entity US$450m in synergy savings. The Euronext stock exchanged-based business, with its national strongholds in Paris, Amsterdam and other continental markets might, however, also be sold off as a standalone company to further increase the attractiveness of the new company.
Commenting on the EC approval, Duncan Niederauer, chief executive officer (CEO) of NYX, said: "This is obviously a significant step forward in completing our compelling combination, and we now look forward to working with our regulators to obtain the final approvals necessary to close the transaction."