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Last Updated: Friday, 2 June 2006, 10:53 GMT 11:53 UK
NYSE and Euronext in $20bn merger
Euronext sign
In May Euronext said the NYSE offer was "attractive"
The New York Stock Exchange (NYSE) has agreed to buy the pan-European Euronext exchange, creating the first transatlantic stock market.

The NYSE edged out its German rival, Deutsche Boerse, to clinch the deal, which aims to create a business worth $20bn (16bn euros; 11bn).

The new firm will have its US base in New York and international headquarters in Paris and Amsterdam.

NYSE and Euronext said the move was a "merger of equals".

News of the agreement pushed Euronext shares 1.40 euros, or 2.03%, higher to 70.3 euros while NYSE rose $2.65, or 4%, to close at $62.45 on Thursday.

NYSE's $10bn cash and shares offer - which still needs to be backed by shareholders - has beaten off a bid from rival Deutsche Boerse.

Stock exchanges globally are looking to merge as competition for business increases, fuelled by a shift into electronic trading.

A merged exchange has more appeal as traders, investors and issuers are all keen to reduce transaction costs - especially in clearing and settlement.

For the 214-year-old NYSE, the addition of Euronext attracts businesses which may have been put off by the extensive US regulation implemented after a series of corporate scandals, including the collapse of energy giant Enron.

'Attractive combination'

A partnership with Euronext fulfils our shared vision of building a truly global marketplace
John Thain, NYSE

Under the deal, each NYSE share will be converted into one share of common stock in the merged company, to be renamed NYSE Euronext.

Euronext shareholders will have the chance to exchange each of their shares for 0.98 shares of NYSE Euronext stock and 21.32 euros in cash.

Paris-based Euronext, which operates bourses in Paris, Amsterdam, Brussels and Lisbon, will also pay its previously announced dividend of three euros per share.

The merged firm will be led by NYSE Group boss John Thain, with Euronext chief executive Jean-Francois Theodore as deputy chief executive officer and head of international operations.

Mr Thain said the deal was "an important development in the history of the NYSE, Euronext and the global capital markets".

He added: "A partnership with Euronext fulfils 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."

Euronext presented the offers from both Deutsche Boerse and the NYSE to its shareholders on 23 May, but at the time they said both offers were too low.

Other mergers

While executives from Euronext have been more positive about a tie-up with the NYSE, some have said the offer still undervalues the firm.

As competition between exchanges has increased, analysts are predicting that more mergers will follow as companies look to reduce costs and boost client numbers.

Earlier this year, Euronext ended its attempts to acquire the London Stock Exchange (LSE) after the US tech-heavy Nasdaq expanded its stake in the LSE.

Since then, Nasdaq had made several share acquisitions, and now holds over 25% of the exchange.

Euronext 'attracted' to NYSE bid
22 May 06 |  Business
Deutsche Boerse lays out bid plan
19 May 06 |  Business
Deutsche Boerse aims for Euronext
22 Feb 06 |  Business
NYSE and Euronext 'set to merge'
21 May 06 |  Business
Nasdaq's LSE stake grows to 25.1%
19 May 06 |  Business

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