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By JACOB BUNGE And CHARLES FORELLE
The tie-up agreement between NYSE Euronext and Deutsche Börse AG would cost a rival bidder $337 million to break up, according to documents filed with regulators Wednesday.
NYSE Euronext and Deutsche Börse each agreed to pay the other party a €250 million ($337 million) termination fee should the deal be spoiled. That is equal to about 3.4% of the deal's value of $10 billion when it was announced Tuesday. Analysts said the breakup fee is on the high side.
"By putting something like this in, you're trying to make sure it's too expensive for anybody else to step in," said Brad Hintz, an analyst at Sanford Bernstein.
In a securities filing Wednesday, NYSE Euronext disclosed additional details on how the combined company would operate.
In a sign of how carefully executives are trying to balance the interests of shareholders, regulators and political leaders in the U.S. and Europe, the company said its management committee would meet "alternately in Frankfurt and New York."
The chairman of the combined company also will work "closely" with its chief executive "in the spirit of a permanent and constructive dialogue," according to the filing.
Deutsche Börse and NYSE Euronext announced a $10 billion combination that would create the world's biggest exchange group, with Deutsche Börse shareholders owning about 60% of the combined entity.
The new company has no name yet, but the prospective partners have registered the Internet domain www.global-exchange-operator.com, which currently houses an investor presentation.
Speculation is swirling that a rival bidder could emerge, but CME Group Inc. has played down the likelihood of the futures-exchange company making a run for NYSE Euronext.
The combination will prompt a long examination from European regulators, who will focus particularly intently on the two companies' derivatives-trading businesses, lawyers and antitrust experts say.
At the same time, the deal would mark a symbolic victory for a prominent European company. Some analysts say it could also provide benefits, such as easier access to dual listings, to many European corporations.
Weighing the antitrust implications in Europe won't be easy. The combined company would control the bulk of European exchange-based derivatives trading. It would also have significant clearing operations. But traditional exchange operators face a horde of competitors, including computer-trading venues and smaller networks operated by banks and others.
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The EU will "look at this deal very closely," said David Anderson of Berwin Leighton Paisner in Brussels. "The markets are complex, rapidly changing, and the parties have overlapping activities."
In a way, the deal will be a rerun of a case that never happened: Deutsche Börse's unsuccessful, unsolicited 2006 bid for Euronext. (NYSE Group was the winner.) During the 2006 bid, Euronext fretted that the combination would cause antitrust problems in Europe, particularly in the area of derivatives.
Deutsche Börse filed papers with the European Commission asking it to begin a review, in part to try preemptively to dispel antitrust clouds. Deutsche Börse withdrew the application a month later, after it lost the battle, and the commission never ruled.
Some of the same issues will be on the table, including NYSE Euronext's Liffe subsidiary, which handles derivatives trades. Some antitrust experts have said a divestiture of Liffe could help defuse antitrust concerns. But the two companies might not proceed with any deal if such a step were required.
Agence France-Presse/Getty Images
The EU is expected to review Deutsche Börse's pact with NYSE.
Representatives of the two companies didn't return messages seeking comment to discuss the antitrust issues. In a conference call Tuesday, Duncan Niederauer, NYSE's chief executive, acknowledged that clearing an antitrust review in Europe wouldn't be easy but contended that the industry had changed radically since 2006.
Though the world of exchanges has seen substantial consolidation over the past decade, the EU regulator has been involved in few mergers. It didn't look at the NYSE-Euronext deal.
Under EU rules, the antitrust authority in Brussels only has jurisdiction if the companies involved have sufficiently large revenue in more than one EU country.
A spokeswoman for the EU's antitrust watchdog said the agency doesn't comment on proposed transactions but that it is awaiting a formal notification of the companies' intention to merge.
The EU's deadline for ruling won't be set until the parties file an official notification. That may come only after weeks or months of preliminary discussions among regulators and the companies to iron out concerns.
—Aaron Lucchetti contributed to this article.
Write to Jacob Bunge at jacob.bunge@dowjones.com and Charles Forelle at charles.forelle@wsj.com
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