NYSE, Deutsche Boerse agree to merge

by Ken Sweet, contributing writer


NEW YORK (CNNMoney) -- NYSE Euronext (NYX, Fortune 500), the parent company of the New York Stock Exchange, and Germany's Deutsche Boerse agreed to merge in a $10 billion deal that will create the world's largest exchange for stocks and derivatives.

The deal, announced before the U.S. markets opened Tuesday, ends several days of negotiations between the two exchanges.

Under the terms of the deal, Deutsche Boerse will swap 0.47 of its shares for one share of NYSE Euronext. That will make the combined company 60% owned by Deutsche Boerse shareholders, with existing NYSE Euronext shareholders owning the remaining 40%.

The merged company will have combined revenue of $5.4 billion, according to a joint statement, making it the largest exchange by revenue.

"This transaction is a catalyst for the development of a global capital markets community, delivering the best, most transparent, and innovative services for clients and issuers, wherever they are," said NYSE Euronext CEO Duncan Niederauer in the statement.

The transaction will create a new Dutch holding company that will have headquarters in both New York and Frankfurt. The companies did not say what the new company would be named.

Niederauer will be CEO, while Deutsche Boerse CEO Reto Francioni will become chairman.

The merger is just part of what has been a wave of recent consolidation, as exchanges around the world look for ways to reduce transaction costs and increase exposure to the more lucrative derviatives, options and futures markets.

The deal is expected to face heavy scrutiny from both U.S. and European regulators as well as from politicial pundits, analysts said. Last week, former House Speaker Newt Gingrich said the possibility of the NYSE being majority owned by a foreign corporation was a "fundamental blow" to the United States. But other political figures, including New York City Mayor Michael Bloomberg and Democratic Senator Chuck Schumer, have been more upbeat.

"Politics is going to play significant role on whether this deal gets done," said Rafay Khalid, equity analyst for Standard & Poor's. "They want to approve this deal by the end of the year, but I think it's going to take a lot longer than that to work out concessions."

The transaction is expected to close at the end of 2011, pending shareholder and regulatory approval.

Shares of NYSE Euronext fell 2% to $38.68. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.93%4.15%
15 yr fixed3.03%3.12%
5/1 ARM3.27%3.19%
30 yr refi4.01%4.20%
15 yr refi3.09%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,399.67 19.26 0.12%
Nasdaq 4,316.07 57.64 1.35%
S&P 500 1,904.01 17.25 0.91%
Treasuries 2.18 -0.02 -0.82%
Data as of 12:12am ET
Company Price Change % Change
Apple Inc 99.76 2.09 2.14%
Bank of America Corp... 16.26 0.05 0.31%
Pfizer Inc 27.93 0.10 0.36%
Facebook Inc 76.95 1.00 1.32%
Microsoft Corp 44.08 0.45 1.03%
Data as of Oct 20

Sections

Better-than-expected iPhone sales and record Mac sales lifted Apple in its fiscal fourth quarter. More

China's economy has clocked its worst quarter in more than five years, raising concerns over Beijing's ability to meet its own annual growth target. More

In three years, all Chicago high school students will have to take a coding course in order to graduate. More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

Detroit has 80,000 dilapidated properties and 100,000 empty lots. It's trying to get more people like Antjuan Wyatt to buy them. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.