Giant Deutsche Boerse-NYSE merger heads for rocks

(BRUSSELS) - The merger of Deutsche Boerse and NYSE Euronext, which would create the world's largest market operator worth over $17 billion (14 billion euros), looks seriously compromised just weeks from an EU competition decision.

With European anti-trust services setting conditions deemed unacceptable by executives, there is a growing chance that the tie-up putting the New York Stock Exchange under the same roof as the German market operator will fall apart.

A senior executive of NYSE Euronext -- which also operates markets in Paris, Amsterdam, Brussels and Lisbon -- said it would not make additional concessions to secure approval by the European Commission.

"We won't go any further because that threatens the business logic of the deal," NYSE Euronext deputy chief executive Dominique Cerutti told the French business daily La Tribune on Friday.

NYSE chief executive Duncan Niederauer had already acknowledged that it appeared the European Commission was set to reject the plans come a February 9 deadline for its decision, almost one year after the deal was first announced.

But he said they had received no formal notification.

In a video message to employees, Niederauer said of the anticipated rejection: "If that's true, I would have to say that's a pretty disappointing conclusion."

A person familiar with the EU review told AFP earlier in the week that the proposed merger as it stands was unacceptable.

EU competition authorities opened a probe into the deal in August over concerns that the merged company would control 90 percent of the European derivatives market.

In November the companies proposed to separate some of their derivatives operations to allay EU concerns, but sources said the Commission was unsatisfied.

"It is not certain the Commission could accept" the merger in its current state, added the source.

The Commission wanted NYSE and Deutsche Boerse to sell off some of their derivatives businesses to allay competition concerns, which Cerutti said was a position "based on erroneous data."

The proposed merger has also sparked controversy in the United States because it would hand over the New York Stock Exchange to foreign owners.

The merger would see Deutsche Boerse shareholders own 60 percent of the new combined, Netherlands-incorporated firm.

The US Justice Department said in December that Deutsche Boerse would have to sell its 31.5 percent stake in Direct Edge Holdings, the fourth-largest exchange operator in the United States.