Deutsche Börse agrees NYSE Euronext takeover

Deutsche Börse and its transatlantic rival NYSE Euronext have agreed to come together to form what will be the world's largest exchange operator, though a number of regulatory hurdles loom on the horizon and may yet derail the deal.

The German group's shareholders will end up with 60 per cent of the new company. Deutsche Börse management will also end up with 10 of the 17 seats on the new group's board, meaning that, while it is framed as a merger, the deal is in effect a takeover of the NYSE.

The combined entity, which will boast annual trading volumes of more than $20 trillion and operations spread across Germany, France, the UK, Amsterdam, Portugal, Belgium and the US, will be headquartered in both Frankfurt and New York. The business will be incorporated in the Netherlands.

The name is yet to be fixed, although New York senator Chuck Schumer has already fired a warning shot across Deutsche Börse's bows by reiterating his desire to have the new name start with "NYSE".

"The name is an important issue to me," he said, adding that "the NYSE believes their name should go first". The American real estate investor Donald Trump also weighed in, saying it was "ridiculous" to allow the NYSE to be taken over by the German group.

Bidding to keep US opinion on side, NYSE and Deutsche Börse said the American group's head, Duncan Niederauer, will be the new company's chief executive officer.

The German group's Reto Francioni will be the chairman of the combined business.

By joining forces, the two groups expect to generate annual cost savings of $400m. In terms of timing, the transaction is expected to close by the end of this year.