NEW YORK/LONDON European regulators likely will not try to "make or break" Deutsche Boerse AG's $9 billion merger with NYSE Euronext, NYSE Chief Executive Duncan Niederauer said on Tuesday.
Instead, the European Commission probably will consider demanding smaller changes to preserve competition before allowing the deal to buy NYSE to go through, he said.
Niederauer's comments on a conference call discussing NYSE Euronext's quarterly profit decline, come days before the commission is expected to enter a second and more in-depth phase of its antitrust review.
Regulators in Europe and the United States are all that stands between Deutsche Boerse and NYSE Euronext as they move to create the world's largest exchange operator.
Some brokerages and rival exchanges, such as London Stock Exchange Group, have amplified their criticism of the deal, arguing it would hurt competition and concentrate European financial power in Frankfurt.
The European Commission is expected to issue a preliminary review this week, and then move on to a second phase that could last the rest of the year.
"My guess is that their focus will be on what conditions may be placed on us, not on how to make or break the deal," said Niederauer, who would be CEO of the combined company.
He downplayed speculation -- "not surprisingly, much of it driven by our competitors" -- that the commission will ask the companies to dispose of derivatives businesses like the valuable Liffe or Eurex venues.
At issue is the hold that Deutsche Boerse and NYSE Euronext would have on exchange-based European futures trading. The companies have less overlapping business in the United States, where there has been little resistance to a foreign company trying to buy the New York Stock Exchange.
NYSE Euronext estimated on Tuesday that the combination would reduce capital requirements by about $3 billion for "end-users" of European futures contracts.
Shareholders last month endorsed the deal.
The takeover of NYSE Euronext, announced in February, capped a wave of bourse merger plans globally. Most other bids -- including those from LSE, Singapore Exchange Ltd, and Nasdaq OMX Group -- have since failed. (Exchange merger map: r.reuters.com/hav32s )
TRADING DRAGS INCOME DOWN
A slump in trading volumes across NYSE Euronext's transatlantic markets led to a 16 percent second-quarter profit drop.
U.S. stock trading fell 36 percent and European futures trading dropped 20 percent, overshadowed on both counts by heavy volumes from last year's unprecedented May "flash crash" and the onset of Europe's debt crisis.
The Big Board parent said it earned $154 million, down from $184 million a year ago. Excluding one-time items such as costs associated with the merger, NYSE Euronext earned $160 million, or 61 cents per share. Revenue rose 1 percent to $661 million.
Analysts on average expected NYSE Euronext to earn 60 cents per share on $652.7 million in revenue, according to Thomson Reuters I/B/E/S.
Analysts credited a 2 percent slide in operating costs in part for the beat, while a boost in IPOs and technology contracts helped offset the trading slump.
Management did not reduce a 2011 cost estimate, as some expected. The stock price was off 1.9 percent at $32.37.
(Reporting by Luke Jeffs and Jonathan Spicer. Editing by Sophie Walker and Maureen Bavdek)