NYSE Euronext, the U.S. exchange company that Deutsche Boerse AG (DB1) is planning to buy, reported third-quarter profit that exceeded estimates as market volatility boosted trading volumes.
Net income gained 56 percent to $200 million from $128 million a year earlier, the New York-based company said today in a statement. Excluding some items, earnin[You must be registered and logged in to see this link.]
gs rose to 71 cents a share, compared with the 70-cent average estimate of 14 analysts surveyed by Bloomberg whose forecasts ranged from 67 cents to 72 cents a share.
Stock trading volume climbed in the U.S. and Europe in the third quarter as investors increased activity, speculating whether the European debt cris[You must be registered and logged in to see this link.]
is was spreading and the U.S. was on the brink of a recession. Equity trading and listings accounted for about half of NYSE Euronext (NYX)’s sales last year. The company has been expanding into derivatives and technology to broaden its revenue sources, part of the reason for the Deutsche Boerse deal, which would create the world’s largest exchange.
“September was a strong finish to the quarter for NYSE,” Patrick O’Shaughnessy, an analyst with Raymond James & Associates Inc. in Chicago, wrote in a note before the earnings were released. “Although volumes were down versus August across all four major product groups, they held up slightly better than we had anticipated across every product except European derivatives.” He rates the stock “strong buy.”
The shares rose 3.1 percent to $25.53 yesterday in New York. They tumbled 32 percent last quarter, the second-biggest drop among the 25 members of the Bloomberg World Exchanges Index behind that of Hellenic Exchanges SA.
The decline helped drag down the value of the all-stock Deutsche Boerse takeover to $6.7 billion from $9.5 billion when it was announced in February, data compiled by Bloomberg show. While shareholders have approved the merger, it still has to pass European regulators.
The companies have until Nov. 17 to offer concessions that may appease the concerns of European Union regulators about their proposed deal, according to three people familiar with the situation. Concessions would have to eliminate EU concerns that the takeover could monopolize derivatives trading in Europe, according to a separate person familiar with an antitrust complaint sent to the exchanges last month.
Last week, NYSE Euronext and Deutsche Boerse each said they plan to buy back some of their stock before the end of the year, when the deal is set to close. NYSE [You must be registered and logged in to see this link.]
Euronext will repurchase $100 million of its own shares through the end of the year, and Deutsche Boerse will buy 100 million euros ($138 million) of its stock. They plan to coordinate the programs so that NYSE shareholders will still own 40 percent of the combined company.
Deutsche Boerse third-quarter earnings before interest and taxes excluding certain items climbed 46 percent to 356.4 million euros, while revenue rose 20 percent to 604.7 million euros. Nasdaq OMX Group Inc. (NDAQ), NYSE Euronext’s smaller competitor, had quarterly earnings that matched analyst estimates, according to a report on Oct. 26.
Equity trading volume on U.S. exchanges surged 14 percent in the third quarter from a year earlier, Bloomberg data show. Trading surged in Germany as the DAX Index tumbled 25 percent during the quarter, the most since 2002. Average daily volume for companies in the measure more than doubled from a year earlier, according to data compiled by Bloomberg.[You must be registered and logged in to see this link.]