08 November 2006

Deutsche Börse and Borsa Italiana end merger talks

Deutsche Börse says alliance talks with Borsa Italiana on creating a federal pan-European exchange have been halted in a move that leaves the German market operator without a merger partner and alone in its pursuit of Euronext.

Deutsche Börse said last month that it had signed a letter of intent with Italian stock exchange operator Borsa Italiana 'aimed at creating a federal European exchange that includes Euronext'.

But in a brief statement the German Börse says it has suspended talks with Milan-based Borsa Italiana after it became clear 'that an agreement between the two parties on certain key issues was not achievable in the short term'.

'Deutsche Börse regrets this development, however decided against this background not to pursue the talks further,' says the statement.

The Deutsche Börse/Borsa Italiana alliance was billed as an attempt by the exchanges to derail Nyse Group's takeover bid for pan-European exchange Euronext. Borsa Italiana said at the time that the deal provided 'an alternative and better proposal than the one by Nyse for Euronext'.

But the breakdown of talks is a serious blow in Deutsche Börse's efforts to woo Euronext away from a trans-Atlantic merger with Nyse.

Euronext agreed a $10 billion - or EUR7.8 bn - takeover deal from Nyse in May, after rejecting a rival offer from Deutsche Börse. Euronext shareholders are due to vote on the proposed Nyse takeover in December.

Last month Euronext called on London's financial community to support the transatlantic deal rather than a tie-up with Deutsche Börse. Hugh Freedberg, CEO of Euronext's London-based derivatives exchange Liffe, warned that a merger between Euronext and Deutsche Börse would see 'an exodus of jobs' to Frankfurt.

© finextra