Euronext investors overwhelmingly back NYSE merger
Euronext shareholders on Tuesday (ENXT.PA) approved overwhelmingly a $14-billion plan to merge the multinational European exchange operator with the New York Stock Exchange and form the first transatlantic bourse.
Around 98.2 percent of shareholders present or represented at the meeting backed the merger, a margin that surprised even Euronext Chief Executive Jean-Francois Theodore after several shareholders voiced opposition to the deal in recent weeks.
"I was quite positively surprised," a smiling Theodore told Reuters after the meeting. "This is an important step that we've made, but (the deal) won't be completed before March."
The deal's attractive financial terms, along with diminished concerns among some shareholders about the risk of U.S. regulatory spillover into European markets, explained the stronger-than-expected majority, analysts said.
At Tuesday's meeting, 64.9 percent of Euronext shareholders were physically present or had voted by proxy.
The approval removes one of the final hurdles to the creation of a global exchange after a two-year industry battle to consolidate to cut costs and increase execution speed.
It comes as London Stock Exchange Plc (LSE.L) urged its shareholders to reject a $5.3-billion hostile bid from Nasdaq Stock Market Inc. (Nasdaq:NDAQ - news), sending shares in the leading U.S. electronic exchange to their lowest level in over a month.
Shares of Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon bourses and the Euronext.Liffe derivatives exchange, closed 0.7 percent higher at 91.25 euros.
NYSE shareholders will vote on Wednesday and are widely expected to approve the deal as well.
"I anticipate the NYSE shareholders to follow suit so that a merger deal can be struck by early next year," U.S. Congressman Joseph Crowley, who represents New York, said in a statement, adding that the deal would maintain New York City's "role as the investment and financial capital of the world."
Euronext Chairman Jan-Michiel Hessels said a tender offer could be expected within days or weeks, after definitive approvals from European market regulators, the Dutch finance ministry, the U.S. Securities and Exchange Commission and French authorities.
"Euronext has been a pioneer in European consolidation. Now we are going global," he said.
Theodore said the door was "still open" for Borsa Italiana to join NYSE Euronext. Euronext and the Milan exchange operator held talks about a possible alliance earlier this year.
QUIET MEETING
Euronext committed to merge with NYSE in June after rebuffing a rival offer from Deutsche Boerse (DB1Gn.DE), incurring the wrath of some shareholders as well as top European politicians who favoured a pan-European combination.
But the extraordinary general meeting proved relatively quiet.
Shareholders like Dutch asset managers Robeco, which had initially opposed the deal, joined others like U.S. hedge fund Atticus, Euronext's top shareholder, in backing the merger.
"After the newest measures (by the Dutch finance ministry and European regulators) the critics were also won for the deal," Rabo Securities analyst Thomas Nagtegaal said.
Euronext market regulators and the Dutch finance ministry have given preliminary approval for the merger pending clarification of some issues.
Euronext's Theodore told shareholders that both companies were "very confident" they could meet revenue and savings synergies of $375 million, mainly by rationalising information and technology systems and platforms.
Following shareholder approval, analysts are anticipating greater clarity on the combined entity's operations, said Keefe, Bruyette & Woods analyst Richard Herr.
"We are looking forward to getting more color on timing integration and an update on expense and revenue synergies," he said. "People may start to look harder at the combined earning power of the company and NYSE could potentially give back some of those significant gains from the last few weeks."
NYSE shares were trading at $102.52, up 8 percent from their closing price at the beginning of the month.
The deal offers Euronext shareholders 0.98 new NYSE Euronext shares and 21.32 euros in cash for every existing share, valuing the bid at 95.53 euros per Euronext share, a rise of 35 percent since the merger plan was announced.
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