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Nyse clinches Euronext deal

02 June 2006  |  9113 views  |  0 handshake

The New York Stock Exchange inked an agreement to acquire pan-European stock and derivatives exchange Euronext for around $10 bn (EUR7.8 bn), in a deal that will create the first trans-atlantic securities market.

Dubbed "a merger of equals" by the two parties, the combined company will be called Nyse Euronext and will have a US headquarters in New York, international headquarters in Paris and Amsterdam and its derivatives business in London.

Nyse Euronext will be the world's largest and most liquid securities marketplace, with a combined market capitalisation of around $20 billion.

Under the terms of the merger deal, Euronext shareholders will be able to exchange each of their shares for 0.98 NYSE Euronext shares and EUR21.32 in cash. Under a "mix and match" option Euronext shareholders will be able to select how much cash or stake in the combined company they want. Euronext will also pay a previously announced dividend of EUR3 per share.

Euronext and Nyse say the combination will generate cost savings of $375 million, with some $250 million of that from integrating their respective technology platforms.

The combined exchange is expected to be launched within six months, following regulatory and shareholder approval.

John Thain, Nyse CEO, will become chief executive of the combined group, while Euronext CEO Jean-François Théodore will run the European operations.

Commenting on the merger, Theodore says: "Combining Nyse's global brand and leading cash marketplace with Euronext's international, cross-border, and diversified product range, technology and integration skills is the winning global platform for growth.

"Moreover, this partnership will allow the successful Euronext model to be extended further across the Eurozone and is the best way to create a competitive European capital market."

Thain adds: "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 launched its bid for the European market operator on 22 May. On the same day Germany's Deutsche Börse released details of its higher EUR8.6 bn cash-and-share bid for Euronext. But despite the higher bid, Euronext executives favoured the Nyse deal.

However Deutsche Börse could be gearing up to launch a hostile counter-bid. The German exchange has released a statement saying it continues to "believe in the substance and value of a transaction with Euronext" and will continue to work towards a combination of the two companies.

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