Deutsche Boerse AG abandoned its more than $10 billion bid for Euronext NV today, calling the goal unachievable and dealing a blow to its hope of building a pan-European stock exchange.
But the decision cleared the way for the NYSE Group Inc. to complete its acquisition of Euronext exchange and form the world's first trans-Atlantic stock exchange.
Deutsche Boerse said its plans to try to combine with Euronext - which has repeatedly rebuffed the offer or more thjan €8 billion in favor of a bid now worth more than $13 billion from NYSE, owner of the New York Stock Exchange - would not create the value its shareholders desired.
"We are convinced that, in our industry, mergers can only be successful with the support of both management teams and the industry," said Deutsche Boerse Chief Executive Reto Francioni. "We have invested time and commitment, but it is part of our responsibility to recognize when further effort doesn't make sense."
He told reporters that Euronext, the operator of the Paris, Amsterdam, Brussels and Lisbon exchanges, repeatedly shot down proposals from Deutsche Boerse.
"There is no sense in continuing to work in the direction toward a merger with Euronext," Francioni said. "All of our efforts in this regard ... they were all rejected in one way or another or simply fell on deaf ears."
Francioni did not rule out further involvement in expansion or consolidation of the industry, both at home and abroad.
He said the decision means Deutsche Boerse is now "free to go in all the markets," adding that it was looking outside Europe. He did not elaborate.
"External growth is an option but not a necessity for Deutsche Boerse. Based on our very strong position in the industry, we will continue our successful organic growth path," Francioni said. "Nevertheless, we expect to take an active role in the consolidation process in our industry in Europe and beyond."
In a conference call with reporters, Francioni was asked if the failure meant he would be forced to step down — as his predecessor, Werner Seifert, was following two failed bids to acquire the London Stock Exchange.
"I see no reason to step down," Francioni said.
Shares of Deutsche Boerse fell 4.1 percent to €125.60 in Frankfurt trading. Shares of Euronext fell 6.5 percent to €83.90.
Deutsche Boerse also withdrew its request for the European Commission to clear the deal.
The decision came as seven of Europe's biggest investment banks said they were working on their own stock-trading platform aimed at competing with the London Stock Exchange.
The banks involved include Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group Inc., Merrill Lynch & Co., Morgan Stanley and UBS AG.
Deutsche Boerse had faced numerous hurdles in its quest to form its own pan-European exchange - something that politicians including French President Jacques Chirac and German Chancellor Angela Merkel, had supported.
Even Jean-Claude Trichet, president of the European Central Bank, touted the advantage of such a combination, noting that it would serve as a counterbalance to the New York Stock Exchange and the Nasdaq Stock Market.
The Nasdaq, after seeing its own bid for the London Stock Exchange rebuffed, has built up a 25.1 percent stake that makes it the biggest shareholder in Europe's largest exchange.
Alois Rhiel, the economics minister of the German state of Hesse, where Deutsche Boerse is based, said the failure of the tie-up with Euronext was "regrettable in that the hoped-for European consolidation will not come."