Proposed exchanges merger hits snags
NEW YORK - A top United States lawmaker on Sunday created waves over two key aspects of the proposed merger between Deutsche Boerse and NYSE Euronext - which management team will run the merged entity and what will be its name.
The intervention by Senator Charles Schumer, a senior Democrat and a member of the Senate Banking Committee, is the latest indication that getting approval for a deal on both sides of the Atlantic will not be easy.
Schumer told reporters he met NYSE Euronext Chief Executive Duncan Niederauer, who would lead the combined entity, on Friday and again on Saturday.
Schumer said he was told the deal "will give managerial control of the new operation to the team from NYSE, with Niederauer installed as the new CEO".
Hours later, the senator's spokesman Brian Fallon e-mailed Reuters to say that Schumer had not meant to communicate "greater knowledge of the arrangement beyond Niederauer as CEO".
The comments, which came on the day that NYSE Euronext's board met to discuss the proposed deal, touch on a particularly sensitive topic. The question of which managerial team, board and group of shareholders will end up with the most power is controversial on both sides of the Atlantic.
In Germany, the deal is being sold as a German takeover of the NYSE or as a merger of equals. Any suggestion that the NYSE management team will be in control counters that public stance and could create an obstacle to the deal.
Deutsche Boerse declined to comment on the remarks.
Bob Rendine, senior vice-president for NYSE Euronext's global communications, declined to comment on the issue of management.
"We certainly have a lot of respect for Senator Schumer. We're delighted that he is engaged with us on this issue," Rendine said. "We look forward to continuing keeping him up to speed on our progress, and on the potential benefits for New York and New York City."
The lawmaker emphasized that the name of the combined company - and whether NYSE's name will come before that of Deutsche Boerse - was a "critical factor" in whether the proposed deal would win his support.
He says "NYSE" must have first billing for business and branding reasons, but also to reassure him that the combination is a true merger of equals.
"Some may say 'What's in a name?' but I say, 'A lot,' he said. "The New York Stock Exchange is a symbol of national prestige, and its brand must not suffer under this merger."
The New York Stock Exchange occupies a central role in the US, Schumer said. For "the Germans" to place the NYSE name second calls into question whether the deal is a merger or a takeover, he said.
"The name of the new company will be a critical factor in determining support for this merger, both in the regulatory review process as well as in the court of public opinion," Schumer said. "It should be resolved sooner rather than later."
The two companies on Saturday issued a joint statement insisting a name for the combined holding company has not yet been chosen. However, two people close to the negotiations told Reuters that a single company may be called "DB NYSE Group".
Frankfurt-based Deutsche Boerse last week announced the talks to acquire NYSE Euronext. The larger German company would have a 60 percent stake in the combined company, but Niederauer is to be named chief executive.
Until now, the proposed sale of a 218-year-old symbol of US capitalism has drawn little protest from officials.
New York Mayor Mike Bloomberg and US Representative Carolyn Maloney of Manhattan said they were supportive, arguing it is better that the NYSE be part of what would be the world's largest exchanges company.
French Economy Minister Christine Lagarde, though, said she was concerned about the deal's effect on the security and stability of financial markets.
Reuters
(China Daily 02/15/2011 page17)