BUSINESS
02/03/2012 07:23 pm ET Updated Apr 05, 2012

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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