Atticus backs Euronext merger plans

Atticus Capital, a US hedge fund that holds 9% of the Euronext stock exchange, has encouraged Euronext to seek a merger with either Deutsche Borse or the New York Stock Exchange.

Atticus said in a statement yesterday that "consolidation creates value in the exchange industry" and a transaction is in "the best interest of all shareholders".

Atticus also holds stock in both potential merger partners: it controls 6% of the New York exchange and 5% of Deutsche Borse.

Another hedge fund, The Children's Investment Fund (TCI), also owns approximately 10% of Euronext and 3% of Deutsche Borse. Although Atticus' statement is prima facie neutral between the two potential tie-ups, both Atticus and TCI are believed to favour a tie-up with Deutsche Borse.

Atticus' statement, calling on Euronext to keep both options open, seems especially pointed coming the day after Euronext's board called for shareholders to back to the NYSE bid (See: Euronext board favours NYSE offer at AGM).

Hedge funds, and TCI in particular, have been increasingly activist shareholders recently; Deutsche Borse's former chief Werner Seifert blamed TCI manager Christopher Hohn for scuppering his attempt to merge with the London Stock Exchange late last year.

Nor would this be the first time that Euronext's management has seemed at odds with its hedge fund investors. Last month it issued a statement insisting it was still open to all offers, a move widely seen as a rebuff for shareholders pressing for a Deutsche Borse merger.

Euronext provides stock and derivatives markets in Belgium, France, the Netherlands, Portugal and the UK. It is Europe’s leading stock exchange based on trading volumes.