NYSE Euronext Would Offer 12 Trading Hours

By CHRISTOPHER WANG

NEW YORK – The proposed combination of the New York Stock Exchange and Euronext NV would mark not only the first trans-Atlantic securities market but a Goliath of the equities trading business. If approved by regulators and shareholders, NYSE Group Inc.’s acquisition of Euronext would create a single platform where traders could deal in stocks, options, futures, commodities and corporate bonds across two continents – for up to 12 hours daily.

That convenience could attract major institutional investors and lure them away from smaller, less expansive exchanges.

The NYSE agreed to buy Euronext for $9.96 billion in cash and stock, trumping a larger rival offer from Deutsche Boerse AG. Once the deal is approved, NYSE Euronext will handle about $2.1 trillion in stock trades each month and boast a market value of about $20 billion.

The historic move to consolidate the two exchanges is expected to launch a wave of consolidation in financial markets around the globe, one that might eventually arrive at a round-the-clock worldwide trading system.

"This is an important development in the history of the NYSE, Euronext and the global capital markets," NYSE Chief Executive John Thain said in a statement.

"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."

Euronext is Europe’s second-largest stock exchange, operating bourses in Paris, Amsterdam, Brussels and Lisbon. The duo of NYSE and Euronext would top Chicago Mercantile Exchange Holdings Inc., which is worth about $15.6 billion.

The deal comes amid a flurry of proposals that kicked off in March, when the Nasdaq Stock Market Inc. made a $4.5 billion advance for London Stock Exchange PLC. After the offer was rebuffed, the Nasdaq has since acquired more than 25 percent of the LSE, prompting Euronext to end its long-running interest in the British exchange.

In addition, Deutsche Boerse last month unveiled a competing offer for Euronext that was valued at about $11 billion. The German exchange has already failed on several occasions in recent years to acquire the London Stock Exchange, and has told shareholders that it will look for deals in the U.S. and Asia if its bid for Euronext fall short.

"The NYSE and Euronext deal is putting heat on all the other exchanges to consolidate, and the big prize out there is the London Stock Exchange," said Axel Merk, whose Palo Alto, Calif.-based Merk Investments manages the Hot Currency Fund.

Under the proposal, each NYSE share would be converted into one share of common stock of the new combined company NYSE Euronext. Holders of Euronext ordinary shares would be offered the right to exchange each of their shares for 0.98 share of NYSE Euronext stock and 21.32 euros ($27.42) in cash.

NYSE and Euronext said the acquisition should generate about $375 million in savings, about $250 million of which will come from integrating their technology platforms. NYSE itself is new to the electronic trading game: the 214-year-old exchange bought electronic rival Archipelago Holdings Inc. in March, which also turned NYSE into a public company.

The exchange will have its group headquarters at the NYSE’s current base in New York and European headquarters at Euronext’s base. Euronext Chairman Jan-Michiel Hessels will remain at that post, while Thain would continue as CEO. The board of a combined company would include 11 directors from NYSE and nine from Euronext.

Each of the companies’ markets would come under the jurisdiction of local regulators – a move that seemed aimed at addressing concerns that European exchanges would have to comply with stricter U.S. market rules. Passage of the deal is expected to be a cooperative effort between regulators in the U.S. and Europe, said Christopher Cox, chairman of the Securities and Exchange Commission.

Common shares of NYSE Euronext would be listed on the New York Stock Exchange and Euronext.

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AP Business Writer Joe Bel Bruno contributed to this report.