“This is a black day for Europe and for its future competitiveness on global financial markets,’’ the executive board of Deutsche Boerse said on February 1 when it dropped its attempt to merge with NYSE Euronext, in the face of European Union opposition.
And it won’t let go.
The board of the operator of the Frankfurt Exchange, Eurex derivatives market and Clearstream clearinghouse has decided to sue the European commission for blocking its planned $9 billion merger with the operator of the New York Stock Exchange and other markets.
Deutsche Boerse plans the suit in order to recoup some of its merger costs and to clear the way to potentially make a future deal in which it could expand its derivatives operation. The EU competition commission opposed the merger, because merging Eurex with NYSE’s Liffe operation would mean the combined company would control an estimate 90 percent of the European market
The move is not designed to revive the merger talks with NYSE Euronext, which have been terminated.
Deutsche Boerse Chief Executive Reto Francioni said on a conference call last month that an appeal might force European regulators to change their definition of the derivatives markets, which does not include over-the-counter trading.
European regulators did not take into account the over-the-counter derivatives market when assessing the antitrust implications of the proposed deal, Reuters reported.
Deutsche Boerse is concerned that allowing that definition to stand could keep it from future deals for derivatives markets in Europe, according to the Reuters report.
The exchange operator spent 82.2 million euros on the failed merger.
The company intends to bring the suit before the European court in Luxembourg.
NYSE Euronext is not party to the legal action, the Telegraph of London reported.
Tom Steinert-Threlkeld writes for Securities Technology Monitor.