UPDATE: NYSE Plans To Cut $250 Million In Expenses By End Of 2014
02 Aprile 2012 - 8:43PM
Dow Jones News
NYSE Euronext (NYX) unveiled a plan to save $250 million in
annual expenses by the end of 2014 as the exchange company
refocuses on its independent strategy after the European Union
blocked its planned merger with Deutsche Boerse AG (DB1.XE,
DBOEF).
The effort aims to more closely integrate technology used to
power NYSE Euronext's markets, streamline its organization and trim
the company's business portfolio, according to documents prepared
by the company for its annual investor day.
"We would view this as a very offensive step on our part," said
Duncan Niederauer, chief executive of NYSE Euronext, speaking to
investors and analysts Monday. "We will be giving you progress
reports along the way."
The Big Board parent is tightening its belt after the EU
formally blocked the Deutsche Boerse deal on antitrust grounds. It
also is ramping up capital returns to shareholders. In early
February, the firm resumed a $550 million share-repurchase program
and Niederauer Monday reiterated the company's commitment to paying
dividends.
Shares in NYSE Euronext climbed on the cost-cutting disclosure
and recently were 1.9% higher at $30.57.
NYSE Euronext Chief Financial Officer Michael Geltzeiler and
Chief Operating Officer Lawrence Leibowitz will lead the effort,
according to the company. The plan seeks to trim $90 million in
technology-related costs and $90 million in infrastructure costs,
with an anticipated $70 million in savings derived from taking
clearing functions in-house and other portfolio moves.
The New York company expects to achieve about one-quarter of the
cost savings by the end of 2012 and 60% of them by the end of
2013.
Monday, Geltzeiler said NYSE Euronext will wind down its
carbon-trading joint venture, NYSE Blue, which runs a European
trading platform and had planned to expand in the U.S. and Asia.
NYSE Euronext has run the France Bluenext emissions market since
2007 and in 2010 merged that operation with market technology
company APX to help develop the combined unit.
An agreement has been struck to wind down the joint venture
pending regulatory approvals, according to a spokesman for NYSE
Euronext. The exchange company would retain its ownership in the
Bluenext platform while selling its 70% stake in APX, taken to form
the NYSE Blue joint venture.
NYSE Euronext's stakes in other exchanges also may come down,
Geltzeiler said. The recent initial public offering of India's
Multi-Commodity Exchange will allow NYSE Euronext to sell down its
approximate $60 million position in that firm, he said, upon
completion of a one-year lockup period.
Discussions are in motion for NYSE Euronext to sell some of its
20% stake in the Qatar Exchange, bought for $200 million in 2009,
Geltzeiler said. NYSE Euronext aims to remain an investor there,
albeit with a smaller position.
The company also could sell down its approximate 9% stake in
Anglo-French clearinghouse operator LCH.Clearnet SA, which is
moving ahead with a deal that would result in the London Stock
Exchange Group PLC (LSE.LN) taking a majority stake in that firm.
"Depending on what transpires with the LSE bid," NYSE Euronext may
reduce that position as well, Geltzeiler said.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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