The boards of NYSE Euronext and Deutsche Boerse AG are expected to meet on Tuesday for a final vote on their planned deal, a source close to the situation said on Friday, as exchanges left out of the merger frenzy plotted their response.
A formal merger document that can be presented to the companies' boards is not yet prepared, a separate source familiar with the situation said. Other sources said the NYSE Euronext board is also expected to meet on Sunday, but the details of what it might discuss were unclear.
The two companies declined to comment.
Deutsche Boerse and NYSE Euronext said on Wednesday they were in advanced talks to merge, just hours after London Stock Exchange unveiled a bid for Canadian market operator TMX Group Inc.
Most of the tough decisions, including the composition of a combined Deutsche Boerse-NYSE Euronext board, have been made, but a deal is not done yet, the first source said, adding that the exchanges are working toward an announcement on Tuesday.
Important issues such as the exact exchange ratio and premium for the deal are yet to be decided, the source said.
All the existing brand names will stay in place in a combined company, the source said. The only question on that front is around the name of a new Dutch holding company being contemplated in a merger, and that has not been decided, the source said.
Other exchanges said they were considering striking their own deals or looking to take advantage of the distraction, in early signs of ripples through the world's capital markets.
CBOE Holdings Inc, IntercontinentalExchange Inc, BATS Global Markets and Chi-X Europe all weighed in on Friday on the deals that would see Europeans acquire the New York Stock Exchange and the Toronto Stock Exchange.
Every exchange that wasn't involved in the two mergers -- the four that were not involved -- had to at lunch on Wednesday be asking themselves, 'Should I be involved in some way?' and calling their bankers and thinking strategically, said Alan Dean, CBOE's chief financial officer.
It has to be a jolt, I think, for all market participants in this industry, he said at a conference hosted by Credit Suisse.
CBOE, the largest of the U.S. options venues, is seen as a likely takeover target. The other public U.S. operators -- ICE, Nasdaq OMX Group Inc and CME Group Inc -- are mostly larger players with histories of being buyers.
The Deutsche Boerse-NYSE Euronext deal would create the world's largest exchange company and could put pressure on others to keep pace as the companies shift into more profitable derivatives businesses to stave off competition from upstart stock-trading venues.
Jeffrey Sprecher, chief executive of the futures-oriented ICE, said his rivals are attempting to muscle their way in or acquire their way into the derivatives space, reinforcing the value of that business.
It bodes very very well for my company to have a lot of these people distracted by with these complicated mergers, these cross-border mergers that are going to involve a lot of regulation and regulatory intervention to get these deals completed, Sprecher told the conference.
We feel very opportunistic right now that we're in an excellent position to take advantage of their downturn.
Shares of U.S. exchange operators were little changed Friday after a volatile week in which NYSE Euronext and Nasdaq OMX soared to multiyear highs. NYSE Euronext shares edged up 1.3 percent to $38.31. Deutsche Boerse closed 0.8 percent higher at 61.62 euros.
Both Deutsche Boerse and the LSE, however, face a tangle of regulatory, political and legal hurdles to get their respective deals done.
The Deutsche Boerse plan foresees its XETRA cash equity market joining to the Euronext platform to form a pan-European share-trading market, a source familiar with the situation said. This in turn will be part of a larger equities division that will be run out of New York.
The shares of Hong Kong Exchanges and Clearing Ltd fell to a four-month intraday low on Friday, as pressure mounted on the world's most valuable stock exchange operator to show it can effectively compete against any new, giant competitors.
HKEx -- which issued two separate statements this week stressing it was open to strategic alliances -- could look to CBOE or Nasdaq as possible partners, observers said.
If I am the Hong Kong exchange, I would be trying to approach the bigger U.S. stock exchanges like Nasdaq right now, said Ronald Wan, managing director of the Hong Kong unit of China Merchants Securities.
Weighing in on the NYSE deal for a second straight day, New York City Mayor Michael Bloomberg said links with Asian exchanges might prove more difficult than with Latin American exchanges, which he called the next natural link after the Deutsche Boerse tie-up.
In Europe, trading venues BATS and Chi-X said they extended their merger talks to secure a deal, which has taken on added importance in light of the Deutsche Boerse-NYSE Euronext talks.
The venues, which are owned and used by the largest European trading firms, were aiming to strike a deal by February 11, according to people familiar with the matter, but the firms said on Friday talks were still going on.
Chi-X Europe, which is the second-largest European share trading venue, and BATS, which owns BATS Europe, said late last year they were in exclusive negotiations, drawing a line under a bidding process that also involved Nasdaq OMX and Deutsche Boerse.
The merger makes the Chi-X-BATS deal more important, said Richard Semark, managing director of European client trading at UBS.
Our greatest strategic requirement is that competition is sustainable in Europe and that the market moves toward pan-European platforms rather than national ones. To this end, a deal between BATS and Chi-X should ensure viable long-term competition, he said.
Chi-X Europe has a market share of 16.7 percent, after the London Stock Exchange with 23.8 percent. Euronext has 16.1 percent, Deutsche Boerse 11.6 percent and BATS 6.1 percent, according to Thomson Reuters data.
A combined Deutsche Boerse-NYSE Euronext would become the top European trader, with 27.7 percent, and a combined Chi-X-Bats would have 22.8 percent.
(Additional reporting by Ludwig Burger and Edward Taylor in Frankfurt, Luke Jeffs in London, Kelvin Soh in Hong Kong, and Paritosh Bansal and Joan Gralla in New York; editing by John Wallace and Andre Grenon, Gary Hill)