NYSE, Euronext to Merge
Capping weeks of negotiations, the New York Stock Exchange’s parent company agreed Thursday to merge with Euronext, which operates stock markets in Paris, Amsterdam, Brussels and Lisbon and a major futures market in London.
The deal, which had been widely anticipated in recent days, would create the first transatlantic securities market. It also would pressure rivals, such as the Nasdaq Stock Market, to consolidate as well.
NYSE Group Inc. said it would buy Euronext for nearly $10 billion in cash and stock, trumping a competing bid from Germany’s Deutsche Boerse.
If approved by shareholders and regulators, the NYSE and Euronext would form an entity that would handle $2.1 trillion in stock trades each month.
The two companies promised to “globally redefine the marketplace” for securities trading. One possibility is seamless trading for much of the day: As Europe’s markets are closing, U.S. trading is beginning.
The companies will hold a news conference today in Paris to provide more details on their plans.
“A partnership with Euronext fulfills our shared vision of building a truly global marketplace with great breadth of product and geographic reach that will benefit all investors, issuers and our shareholders and stakeholders,” NYSE Chief Executive John Thain said in a statement.
He also noted that the deal would give the NYSE a large presence in the fast-growing derivative securities business through Euronext’s London futures market, known as LIFFE.
Euronext CEO Jean-Francois Theodore said the deal was “the best way to create a competitive European capital market.”
The newly formed NYSE Euronext would be a publicly traded company with a market value of $20 billion, making it the globe’s most valuable securities market. The largest now is Chicago Mercantile Exchange Holdings Inc., worth $15.8 billion.
Each NYSE share would be converted into one share of the new combined company. Holders of Euronext shares would be offered the right to exchange each one for 0.98 share of NYSE Euronext stock and 21.32 euros (about $27) in cash.
The exchange would have its group headquarters at the NYSE’s current base and European headquarters at Euronext’s bases in Paris and Amsterdam.
Euronext Chairman Jan-Michiel Hessels would maintain that position, while Thain would be CEO. Theodore would be deputy CEO and head of international operations.
Each of the companies’ markets would come under the jurisdiction of local regulators -- a move that seemed aimed at addressing concerns that European exchanges would have to comply with stricter U.S. stock listing rules.
“We are working with our counterparts in Paris and Amsterdam to establish a cooperative approach to the type of combination being proposed,” said Securities and Exchange Commission Chairman Christopher Cox. “We have every expectation that a transaction can take place that will benefit investors in all of the affected countries.”
The deal comes amid a flurry of merger proposals that kicked off in March, when the Nasdaq made a $4.5-billion bid for the London Stock Exchange. After the offer was rebuffed, the Nasdaq went on to buy a 25% stake in the London exchange.
Separately, Deutsche Boerse sought to persuade Euronext directors to agree to a merger.
“This is an attempt by all these stock markets to get more of a global reach,” said Axel Merk, head of Palo Alto-based money manager Merk Investments. But he said “it remains to be seen where the real synergies are for these exchanges to become global.”
NYSE Group shares jumped $2.65 to $62.45 on Thursday before the deal was announced.
