NYSE Group Inc. Chief Executive John Thain said on Friday that Deutsche Boerse could not compete strategically or financially for Euronext, the Paris-based exchange the NYSE has struck an agreement to buy.
According to a transcript of the interview, Thain told CNN: I don't think that the Deutsche Boerse can compete from a strategic point of view, because there's no way that the combination of Euronext and Deutsche Boerse is ever as competitive or strong and powerful as the combination of the NYSE and Euronext will be; I also don't think they can compete financially.
But he said he didn't have any way of guessing what Deutsche Boerse's next move might be.
He also said that the NYSE'S deal for Euronext would strengthen Paris as a financial center.
Our transaction really not only protects Paris, and France, as one of the financial centers, it actually makes it stronger, he told CNN. So I think over time, we'll see some enthusiasm for this particularly out of France, because we really will build France as one of the world's financial centers.
Earlier this month, Euronext signed a $10 billion agreement to be bought by NYSE, rebuffing an offer from Deutsche Boerse.
But Paris being Europe's second largest financial center after London, the French government wants to have a say in the future of the French stock market operator.
French President Jacques Chirac, Italian Prime Minister Romano Prodi and European Central Bank President Jean-Claude Trichet have spoken out in support of an all-European merger between Paris-based Euronext and Germany's Deutsche Boerse, rather than a tie-up with the NYSE.
One driver of international deals is the increased competition among exchanges to list companies, some of which have been dissuaded from listing in the U.S. because of the regulatory burden of the Sarbanes-Oxley act, which was introduced in 2002 after the Enron and WorldCom accounting scandals.
There have been some questions raised in the industry about whether companies listed on Euronext would have to comply with Sarbanes-Oxley corporate governance standards.
Thain said that SEC Commission member Annette Nazareth has been quoted making it very, very clear that there is no question that Sarbanes-Oxley will not in any way be applied to non-U.S. registered companies.
He also said that the market thought the deal would go ahead.
If you look at the value of our deal, compared to Euronext's value ... our deal has been trading at a small premium to their market value, so that's another way of telling you that the market thinks this deal is going forward.
NYSE's shares have fallen 15 percent since the deal was announced, while Euronext's have declined 9 percent.