UPDATE 3-Deutsche Boerse, NYSE in new merger talks-report

Thu Apr 23, 2009 3:29pm EDT

Related Topics

* Merged entity would be world's biggest stock market

* Deutsche Boerse and NYSE Euronext decline to comment

* Shares in both companies rise (Adds analyst comment, updates shares)

By Peter Starck

FRANKFURT, April 23 (Reuters) - Deutsche Boerse (DB1Gn.DE) and NYSE Euronext NYX.N have relaunched talks aimed at a merger that would create the world's biggest stock markets operator, a German magazine said on Thursday.

The talks are at an advanced stage and a merger could be completed next month, manager magazin said, citing unidentified financial sources.

Top executives of the German and the U.S. groups have said they expect consolidation in the industry to continue.

Deutsche Boerse declined to comment, saying in a statement it "does not comment on market rumors as a matter of principle. Over and above this the company has no announcements to make."

NYSE Euronext declined to comment.

Together, NYSE Euronext and Deutsche Boerse would form the world's biggest exchange group. The German exchange operator's stock closed up 1.4 percent while its American counterpart soared more than 13 percent in afternoon trade to $23.25, its highest point since early February.

The FTSE/Mondo Visione Exchange index .FTMV was up 4.3 percent.

Exchanges are under pressure to achieve economies of scale and provide large enough liquidity pools to fend off competition from alternative trading platforms, many of which offer cut-price fees.

Cash equities trading volumes, a key revenue driver, have fallen as a result of the global financial markets crisis.

"There is no rationale in a merger because it would load Deutsche Boerse with deteriorating businesses from U.S. and European cash equities," said Diego Perfumo, analyst at Equity Research Desk, a Connecticut-based advisory firm specializing in exchanges.

Deutsche Boerse -- the larger company by market capitalization -- operates the Frankfurt Stock Exchange, derivatives exchange Eurex and its U.S. subsidiary ISE, as well as custody and settlement house Clearstream.

NYSE Euronext runs the New York Stock Exchange as well as the bourses in Paris, Amsterdam, Brussels and Lisbon, and the London derivatives exchange Liffe.

At a shareholders meeting this month, NYSE Euronext CEO Duncan Niederauer said industry consolidation "is always out there as a possibility," but that the company is now focused on integrating its 2007 acquisition of Euronext.

According to earlier media reports, Deutsche Boerse and NYSE Euronext also held merger talks late in 2008.

NYSE Euronext declined at the time to comment on speculation of a merger, first reported in German magazine Der Spiegel in early December. Deutsche Boerse said that if such talks were held with NYSE they had ended without result. [ID:nL7471958] (For a FACTBOX of leading exchange groups; see [ID:nLV334195]) (Additional reporting by Jonathan Spicer in New York; Editing by Steve Orlofsky)

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