They can switch the Bund and Dax to Liffe connect when Euronext take over.
Germans flag 'concrete' Euronext talks
By Miles Costello
Frankfurt stock exchange operator Deutsche Börse is preparing to go into "concrete" merger talks with its former arch-rival Euronext in a move that ups the pressure on the pan-European exchange to make a decision on whether or not to abandon its interest in the London Stock Exchange.
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Following a meeting of the German exchange's supervisory board yesterday, Deutsche Börse chairman Kurt Viermetz said he was convinced that a merger of partners with Euronext is the "best possible approach" to creating a true European exchange.
"We expect such combination to result in significant synergies and improved growth prospects for all market participants, as well as to create value for shareholders in both companies," he said.
New chief executive Reto Francioni added: "As far as Deutsche Börse is concerned all prerequisites are met and there is a clear mandate to enter into timely negotiations with Euronext with the goal to create a European exchange organisation."
A combination of Deutsche Börse and Euronext would create a European "super exchange" with a market value of at least £13 billion that would dominate equity and derivatives trading across the continent.
As well as being capable of taking on the big American markets such as Nasdaq and the New York Stock Exchange, the combined markets would dwarf the LSE and dominate equity and derivatives trading on the continent.
Deutsche Börse operates the Frankfurt stock exchange and Eurex derivatives market, while Euronext was formed out of a merger between the French, Belgian and Dutch exchange. It now includes the Spanish and Portuguese markets and owns the London-based derivatives market Liffe.
But the renewed warmth of the German group comes just a day after Nasdaq inexplicably drops its £2.4 billion bid for the LSE after it was rejected as "substantially" undervaluing its prospects.
The withdrawal of Nasdaq - although it gave itself plenty of opportunity to rejoin a bid battle - could renew the temptation for Euronext to rekindle a bid of its own for the LSE.
Euronext is known to be the favoured merger partner of the London market and its chief executive Clara Furse.
Euronext declined to comment yesterday on Nasdaq's move although the exchange most recently welcomed Deutsche Börse's solicitations. It is believed to be considering its options in the wake of the American exchange's decision.
Shares in Euronext rose to record highs this morning.
Shares in the LSE continued yesterday's fall, losing 15p or nearly 1.5 per cent to stand at 1,028.5p after the first hour of trading.
