Deutsche Börse increases the pressure on Euronext. Two weeks after the Executive Board, the Supervisory Board of the operator of the Frankfurt Stock Exchange yesterday pleaded for a beginning of "concrete negotiations". Council we are. Behind him, Reto Francioni, Chairman of the Executive Board, made in one-upmanship: "with regard to Deutsche Börse, all conditions are met and there is a clear mandate to quickly enter into negotiations with Euronext.".
Very different designs
These statements prove that negotiations have not yet begun and that the German group is beginning to lose patience. If Kurt Viermetz had said Wednesday evening that a solution appeared to emerge on the thorny issue of the seat, the subject was avoided yesterday evening in the press release. The two companies have a very different designs. Specifically, the German group provides that for merger directions of different trades are distributed between existing sites and Deutsche Börse or Euronext to preserve the balance between national seats. This should not pose problems to the Pan-European operator, since it is in part on this basis it is working. But the second part of the concept of Reto Francioni, the boss of Deutsche Börse, is more worry about its partner. It is the location of the seat and requires that Frankfurt is the seat of effective management of the group, bringing together the core functions such as finance, communication, human resources or the right. No doubt by diplomacy, he shows open to the idea that the legal headquarters is based on a neutral ground.
For its part, Euronext intends to preserve its polycentric organization, where members of the Executive Board are both responsible for strategic functions and role of local representation. Paris-based Jean-François Theodore pattern is responsible for the spot markets. The Executive Board meets regularly in different capitals.
A branch based in Germany with a seat abroad is not only a subject of contention with Euronext, but also a constellation contrary to German law, according to the specialist of an international law firm. "In Germany, the head office is defined by the facts: this is where decisions are taken", he said.
The more usual solution
According to Jacques-Henry de Bourmont, a partner at Haarmann Hemmelrath in Frankfurt, a first solution for Deutsche Börse to acquire its target and transfer its name abroad, for example in the Netherlands. "Before the symbolic status of the operation, group could ask the German tax authorities agreement tax exemptions to this transfer without a taxable liquidation", view, by offering a second option, namely, the constitution of a European society through the creation of a holding company to which securities Euronext NV and Deutsche Börse AG would be made abroad.
In practice, it is the more usual solution in this kind of operations. It would have more merit to the terms of the Land of Hessen, under the tutelage of which operates the Frankfurt Stock Exchange, which requires that entities Deutsche Börse AG, Eurex Frankfurt AG are based in Frankfurt. Through the creation of a holding company, these companies, and Euronext NV, would first stand, which would give diplomatic flexibility in the record. It would avoid head-on approach to the thorny question of the place of effective management.
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