NYSE Euronext and Deutsche Börse plan monster merger

NYSE Euronext, the owner of the New York Stock Exchange, and Deutsche Börse are close to proposing to merge and form the world's largest equity exchange. The deal would directly challenge competition authorities and would accelerate the wave of consolidation sweeping across the industry.

Under its terms, Deutsche would pay a premium to subsume its smaller, US-headquartered rival. This would create a behemoth in Europe, combining a majority of the big national equity markets and merging Europe's two big derivatives exchanges. News of the talks came hours after the London Stock Exchange sealed its own merger with the Toronto stock market yesterday, sparking rumours of other deals.

A combination of NYSE Euronext and Deutsche "creates a group that is both a world leader in derivatives and risk management and the premier global venue for capital raising", the two companies said.

Reflecting the advanced nature of the talks, they also revealed details of the price of the deal and management structure they are planning. Deutsche Börse's shareholders will own 59 to 60 per cent of the combined company, with NYSE Euronext investors owning 40 to 41 per cent, a little more than they would get in a no-premium merger of equals.

Bringing together Euronext, itself a network of European stock exchanges, with the largest remaining independent equity market in continental Europe, would give the new company a dominant position in equities, but it is the derivatives trading side of the business that now has the strongest growth prospects.

Equities trading has fragmented among a large number of smaller, electronic trading platforms, but derivatives exchanges are expecting to win new business from regulatory rules imposed in the wake of the credit crisis, which will push derivatives trading on to formal exchanges or through central clearing houses.

In the last wave of exchange consolidation, the NYSE merged with Euronext in 2007, partly to get control of Liffe, formerly the London International Financial Futures and Options Exchange. Deutsche Börse owns Eurex. The third of the world's "big three" derivatives exchanges is the CME Group, based in Chicago.

Investors sent shares in other derivatives exchanges soaring. Shares in CBOE Holdings – owner of the Chicago Board Options Exchange, the world's largest options exchange – leapt by 12 per cent. And NYSE Euronext's stock surged by 16 per cent, despite warnings from management that the deal had not yet been finalised and from analysts that it faced major competition hurdles.

The effective takeover of the New York Stock Exchange by a European owner could stir political controversy in the US, and the dominant position the combined group will have in Europe is also sure to be a concern.

Ed Ditmire, an analyst at Macquarie Securities, said: " It would be complicated – there would be competition concerns, a list of regulators with a purview over one or the other of these businesses as long as your arm. It would be a relatively challenging one in terms of the typical exchanges hurdles of nationalism. I don't think a deal of this nature is one that would likely be struck or closed quickly."

The combined group would have dual headquarters in New York and Frankfurt, the companies said last night. The chairman would be Reto Francioni, now boss at Deutsche Börse. Duncan Niederauer, the chief executive at NYSE Euronext, would take that title in the new company.

Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence