Duncan Niederauer, NYSE CEO: 'Mega-Mergers' Unlikely In Near Future

* Says exchanges likely to return more capital to holders

* Does not think CME Group would try to acquire NYSE

* NYSE Euronext likely to make more technology acquisitions

By John McCrank

ORLANDO, Feb 3 (Reuters) - NYSE Euronext plans to focus on smaller deals and returning capital to its shareholders after its failed $7.4 billion merger with Deutsche Boerse, the company's chief executive said on Friday.

"I would not expect us, nor anyone else in the industry, to do a mega-merger any time soon," said Duncan Niederauer, chief executive of NYSE Euronext. "I think everyone is going to kind of take a pause and reassess the landscape.

European anti-trust authorities on Wednesday blocked the merger, which would have created the world's biggest stock exchange operator, making it the fourth among a series of large exchange deals to be blocked over the last year.

The European Commission blocked the deal, which had already been approved by U.S. regulators, saying that the combined entity's "near-monopoly" would make it hard for new players to compete.

"This (merger) was a game changer," Niederauer said at TD Ameritrade Institutional's national conference in Orlando. "It made a lot of sense. It didn't happen. Now, I don't think the next thing I should be going to shareholders with is another great cross-border mega-merger."

He also said he does not think CME Group, the biggest U.S. futures exchange operator, would make an attempt to try to acquire NYSE Euronext or Deutsche Boerse, as it is unlikely those deals would get consummated.

CME on Thursday surprised investors with a sharp increase in its dividend, as well as an annual payout. Niederauer called the move "really interesting" and said that other exchanges would likely follow suit.

"I think everyone is going to say, 'maybe we should just distribute more of the money to shareholders and run kind of a slightly lower-growth, more utility-like model.'"

Niederauer said that five of NYSE Euronext's past six acquisitions were technology assets and that he expects the company will do more such deals as it continues to diversify its asset base.

The parent of the Big Board reports its quarterly results next Friday, and Niederauer said he would address three issues on the conference call to discuss the results:

The company's cash management strategy - it recently said it would proceed with $550 million of share buybacks that had been on hold during the merger talks; the running of the business and the expense base of the core company; and NYSE Euronext's post-trade business in Europe and other new initiatives.

"I expect to be held accountable for all of that in the conference call next Friday," he said.

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Comments

[Barbarian At The Gate]

11:12 AM on 02/05/2012

Too bad you didn't get your Monopoly. Have you never heard of Anti-Trust laws?

[blood1]

08:43 AM on 02/05/2012

Interesting points: 1. One of the companies (CME) immediately paid their investor's a large dividend - after the failed promise that the proposed merger would increase their stock price. It wasn't a bribe, it was a pacifier, so they wouldn't whine.
2. One of their companies (NYSE Eurotext) used the opposite approach: Stock buyback, which generally occurs for the purpose of eliminating some stockholder's and increasing the $$$ available for Management to give themselves a bonus.

[Payd Troll]

08:36 AM on 02/05/2012

we are getting away from "too big to fail"? that's a good start

[zelduh]

06:09 AM on 02/05/2012

This is excellent news.

[aforbes808]

10:26 PM on 02/04/2012

Any non-person entity that is too big to fail is too big to exist.

[yahooserious]

06:46 PM on 02/04/2012

And why would that be a bad thing?

[zelduh]

06:09 AM on 02/05/2012

It isn't!

[legalgirl]

12:13 PM on 02/04/2012

"The European Commission blocked the deal, which had already been approved by U.S. regulators, saying that the combined entity's 'near-monopoly' would make it hard for new players to compete." ALREADY APPROVED BY U. S. REGULATORS? NEAR-MONOPOLY? WHICH regulators and WHY? Investigation please.

[cilantro518]

06:19 PM on 02/04/2012

That is exactly the part of the article that caught my eye. The four largest U.S. banks have more assets than the next 46 largest banks combined. In the 5 years prior to 2008 only 11 U.S. banks failed. After the mergers which created the megabanks in 2008, 417 banks have failed in less than 3 1/2 years. Uh, do you think that the "near monopoly" has made it harder to compete?

[aforbes808]

10:23 PM on 02/04/2012

You make a great point. Critical thinking skills!

#250/fave.