Deutsche Börse Jilted in NYSE Deal With Euronext
June 2, 2006
NYSE Group Inc. said Thursday it would acquire the pan-European stock market Euronext for 7.78 billion euros ($9.96 billion) in cash and stock, confirming long-running speculation about a merger that would usher 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.
In a joint statement, the leading US and pan-European securities trading exchanges said they had signed an agreement to combine "in a merger of equals," in a new group called NYSE Euronext.
The 214-year-old NYSE trumped a competing bid by Deutsche Börse, the German operator of the Frankfurt stock exchange, to acquire Paris-based Euronext, which operates bourses in Paris, Amsterdam, Brussels and Lisbon.
Under the deal, NYSE Euronext will be a US holding company, listed on the NYSE and trading in dollars and on the Euronext Paris, trading in euros.
Its US headquarters will be located in New York and its international headquarters in Paris and Amsterdam. London will be the center of its derivatives business.
Building a global marketplace
Once combined, the NYSE and Euronext will handle about 2.1 trillion dollars in stock trades each month and have a market value of about 20 billion dollars.
"This is an important development in the history of the NYSE, Euronext and the global capital markets," NYSE 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."
Under the terms of the agreement, Euronext shareholders will have the right to exchange each of their shares for 0.98 NYSE Euronext shares and 21.32 euros in cash. Euronext also will pay its previously announced extraordinary distribution of 3 euros per share.
The companies said they expect to complete their merger within six months after having received a green light from US and European competition authorities.
What's next for Deutsche Börse?
Deutsche Börse was not available for comment on Thursday about what its next move might be, but the NYSE's move ups the ante for the bourse operator to assemble its own deal to avoid being left behind in global consolidation.
Euronext's rejection of Deutsche Börse's offer marks the fourth time in less than a year that the German group has unsuccessfully launched a takeover bid.
Reactions to the news in Frankfurt were varied.
"It's clearly a slap in the face for Deutsche Börse," one trader told Reuters. "However, no one seriously thought that they would have a chance with Euronext."
An analyst who declined to be named preferred to see the silver lining, saying that Deutsche Börse still has plenty of opportunities for a merger deal within Europe.
"Maybe it's a good thing that the marriage with Euronext didn't work out," he said. "At least Frankfurt didn't end up paying too much."
Other Frankfurt financial experts haven't given up on the possibility of a transatlantic deal for Deutsche Börse, for example with the Chicago Mercantile Exchange (CME).