NYSE Agrees To Acquire Euronext for $10 Billion

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The New York Sun

NYSE Group Incorporated agreed yesterday to acquire Euronext NV for about $10 billion in cash and stock, creating the first trans-Atlantic securities market in a deal that would pressure rival exchanges to consolidate.

The New York Stock Exchange trumped a competing bid by Deutsche Boerse AG to acquire Paris-based Euronext, which operates bourses in Paris, Amsterdam, Brussels, and Lisbon. Once approved by shareholders and regulators, the New York Stock Exchange and Euronext will handle about $2.1 trillion in stock trades each month and have a market value of $20 billion.

The acquisition ushers in a new era for financial markets, one in which investors can trade stocks, options, futures, commodities, and corporate bonds on two continents up to 12 hours a day.

NYSE’s move also ups the ante for rival exchanges – chiefly the Nasdaq Stock Market Incorporated and Deutsche Boerse – to assemble their own deals to avoid being left behind in global consolidation.

“This is an important development in the history of the NYSE, Euronext and the global capital markets,” NYSE’s chief executive, John Thain, said in a statement. “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.”

The newly formed NYSE Euronext will have a market value of $20 billion, making it the globe’s most valuable securities market.The largest is currently Chicago Mercantile Exchange Holdings Incorporated,which is worth some $15.6 billion.

Under the proposal, each NYSE share would be converted into one share of common stock of the new combined company NYSE Euronext. Holders of Euronext ordinary shares would be offered the right to exchange each of their shares for 0.98 share of NYSE Euronext stock and 21.32 euros ($27.42) in cash.

The exchange will have its group headquarters at the NYSE’s current base in New York and European headquarters at Euronext’s base.

Euronext’s chairman, Jan-Michiel Hessels, will maintain that position, while Mr.Thain would continue as CEO. The board of a combined company would include 11 directors from NYSE and nine from Euronext.

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 American market rules.

Common shares of NYSE Euronext would be listed on the New York Stock Exchange and Euronext.

Both exchanges believe the combination will create cost savings of $375 million,with some $250 million of that from integrating their technology platforms. NYSE Euronext is expected to be launched within six months, following regulatory and shareholder approval.

“The Supervisory and Management Boards of Euronext have been through an extensive process of identifying the best consolidation opportunity for our shareholders, issuers, and users, and we strongly believe NYSE is the best partner,” Mr. Hessels said in a statement.

Both Messrs. Hessels and Thain were to give further details today at a news conference in Paris.


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