NYSE Reaches Merger Agreement With Euronext

NYSE Group Inc. (NYX) on Thursday reached agreement to buy Paris-based Euronext (ENXT), for about 7.78 billion euros ($9.96 billion), putting it ahead in the race to create the first transatlantic stock exchange.

Termed a merger of equals by the pair, the new company will be called NYSE Euronext and will have U.S. headquarters in New York, international headquarters in Paris and Amsterdam and its derivatives business located in London. NYSE's CEO John Thain will be chief executive of the combined group.

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Pressure has been intensifying on stock exchanges globally to combine to cut costs and increase execution speed. But despite consolidation occurring within Europe and the U.S., there has not so far been a major deal that links exchanges between the two continents.

The race kicked off earlier this year when Nasdaq Stock Market Inc. (NDAQ), the No. 2 U.S. equities exchange, made an offer for the London Stock Exchange (LSE) which was rebuffed. It has since accumulated a stake of more than 25 percent in the LSE, although under UK takeover rules it is forbidden from launching a takeover bid for six months.

Under the terms of Thursday's deal, Euronext shareholders will be offered the right to exchange each of their shares for 0.98 shares of NYSE Euronext stock and 21.32 euros in cash. Based on Thursday's closing prices, the deal values Euronext at about 7.78 billion euros ($9.96 billion).

Euronext will also pay a previously announced extraordinary distribution of 3 euros per share.

The companies said the combined NYSE Euronext would have a market capitalization of about 15 billion euros ($20 billion).

"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," Thain said in a statement.

The NYSE unveiled its proposed offer for Euronext on May 22. It faced a competing proposal from Germany's Deutsche Bourse AG (DB1Gn), although Euronext's executives favored the NYSE deal. Deutsche Bourse was not immediately available for comment on Thursday.

Thain said earlier on Thursday at the NYSE's first annual shareholder meeting — it became a public company in March — that a definitive agreement with Euronext would not stop the Paris-based exchange from entertaining other offers.

He also said that a deal with Euronext could take six months to complete amid regulatory hurdles and possible competition from other bids, but said that regulators in the United States and France were supportive of a potential NYSE/Euronext tie-up.

In an e-mailed statement, SEC Chairman Christopher Cox said: "We are working with our counterparts in Paris and Amsterdam to establish a cooperative approach to the type of combination being proposed. We have every expectation that a transaction can take place that will benefit investors in all of the affected countries."

NYSE and Euronext said on Thursday they expect to generate pre-tax annual cost and revenue synergies of 295 million euros ($375 million) through the deal.

Jan Michiel Hessels, Euronext's Supervisory Board Chairman, will be chairman of the combined company.