Sunday 11 December 2016

Wave of consolidation in sector will continue, predicts Greifeld

Nandini Sukumar and Erik Schatzker

Published 02/02/2012 | 05:00

Robert Greifeld. Photo: Getty Images
Robert Greifeld. Photo: Getty Images

EU regulators may have blocked the proposed tie-up between the German Exchange Deutsche Boerse and NYSE Euronext, but consolidation among exchanges will continue, according to Nasdaq chief executive Robert Greifeld.

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Speaking at the World Economic Forum in Davos last week, Mr Greifeld responded with "not at all", when asked if the wave of consolidation in the sector had come to an end. "We're pursuing a strategy of organic growth combined with bolt-on acquisitions," he said.

European antitrust regulators, led by European Union Competition Commissioner Joaquin Almunia, formally prohibited the merger of NYSE Euronext and Deutsche Boerse yesterday, the last remaining deal after a year of failed attempts.

The failure of that takeover means $37bn (€28bn) in exchange mergers announced since October 2010 didn't close, according to data compiled by Bloomberg.

Exchanges completed $28.7bn of deals in 2007 and 2008 but the only notable deal last year was Russia's Micex Exchange acquiring its compatriot RTS Stock Exchange on December 19 for $1.5bn.

Nasdaq, which made a failed hostile bid for NYSE Euronext in April, isn't interested in buying London Stock Exchange Group, Mr Greifeld said yesterday. He also said he wouldn't consider a second attempt at NYSE Euronext because the US Justice Department rejected the idea.

Deutsche Boerse agreed to acquire its New York rival in a deal valued at $9.5bn when it was announced last February. Since then, the value has plummeted to about $7.3bn as Deutsche Boerse shares fell.

The companies appealed directly to commission president Jose Manuel Barroso last month to try to salvage their merger, arguing that a ban would harm European exchanges and drive business to other parts of the world.

Speaking at Davos before the merger was formally blocked, NYSE Euronext chief executive Duncan Niederauer said there would be more to come in terms of consolidation in the industry.

Metal

There are "lots of assets that are available right now," Mr Niederauer said. "Everyone will take a look at the London Metal Exchange (LME), LCH Clearnet is an important asset," he added, declining to comment on whether NYSE would make an offer.

The London Metal Exchange, founded 135 years ago, will consider bids on February 23 that may lead to a takeover of the world's biggest metals bourse.

LCH-Clearnet, the world's largest swaps clearinghouse, is holding exclusive talks with London Stock Exchange after previously drawing interest from NYSE Euronext.

"We think the post-trade space is important, we think the technology space is important," Mr Niederauer said.

"You're going to see us focus most of our attention in those arenas, consistent with what we've articulated the standalone strategy to be before."

Executives have embraced consolidation after the number of US and European trading venues increased by about 50 in the past decade, driving down profitability.

Singapore Exchange's $8.3bn bid for Sydney-based ASX was blocked in April after lawmakers rejected losing control of the venue to foreigners.

London Stock Exchange Group ended its bid for the Canadian exchange TMX in June after failing to get enough shareholder support for the $3.1bn deal.

"This is an industry that clearly lends itself to consolidation," Mr Niederauer said. "You will see a wave of bolt-on acquisitions" if the big deals get blocked, he said. (Bloomberg)

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