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05-21-2006, 01:26 PM
NYSE offers Euronext 50:50 merger
By Iain Dey (Filed: 21/05/2006)
NYSE group, the owner of the New York Stock Exchange, will submit a proposal outlining a merger of equals to Euronext, its pan-European counterpart, which is expected to thwart a rival offer from Deutsche Börse (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/20/cnenext20.xml).
The board of NYSE, led by John Thain, the chief executive, met last night to ratify the final draft of the proposal, which would create the first major transatlantic stock exchange operator with a market value of $21bn (£11bn).
http://www.telegraph.co.uk/money/graphics/2006/05/21/cnnyse21.jpg
John Thain [top] and Jean François Théodore Jean François Théodore, the chief executive of Euro-next, is expected to recommend the NYSE deal to his shareholders at the company's annual meeting on Tuesday. The deal is likely to be a catalyst for more consolidation among the world's stock exchanges.
It could also force the London Stock Exchange into a deal with Nasdaq, the other major American exchange, which increased its stake in the LSE to 25.1 per cent on Friday.
The NYSE move comes after Deutsche Börse outlined its rival proposal on Friday. Théodore has already privately rejected the Deutsche Börse approach, which would see control of the enlarged group drift from Paris to Frankfurt.
NYSE's deal would leave Euro-next with autonomous control under its existing structure. Thain would be chief executive of the enlarged group, with the chairman's role taken by Jan--Michiel Hessels, the chairman of Euro-next's supervisory board. Théodore will remain in a senior executive role.
The outline structure has already received an informal blessing from Jacques Chirac, the French President. Thierry Breton, the French finance minister, held separate meetings last week with Thain and Reto Francioni, the Deutsche Börse chief executive, to discuss their proposals.
The NYSE plan is likely to include a small cash component as well as shares, but the deal will value the two businesses as equals. At Friday's close, Euro-next had a market capitalisation of around €8.4bn, while NYSE was valued at $10bn.
NYSE is said to believe that huge synergies can be extracted through the merging of trading platforms and technology. Thain would export the technology from Liffe, Euro-next's -London-based derivatives exchange, to the US operations.
The goal would be to create a system that could trade equities, derivatives and options from all of its exchanges in the US and Europe through one trading screen.
Most of the cost savings in the Deutsche proposal would have come from job cuts. The German exchange employs almost 3,000 people, more than twice as many as Euro-next. The combined group would have faced political difficulties in trying to force through job cuts to justify the deal.
Some sources believe Deutsche Börse may cave in on some of its demands regarding the division of senior jobs in a last ditch effort to save a deal. The German exchange risks becoming isolated by the current phase of consolidation.
There is also an outside chance that the Chicago Mercantile Exchange, which has held talks with Euro-next, may make a late merger proposal.
NYSE's document will outline how a 24-hour transatlantic market could be created almost instantly.
Blue chip companies such as Axa, ING and Philips, which are already listed jointly between New York and one of Euro-next's exchanges, would be moved to a new international trading platform. The transatlantic liquidity would then be used to attempt to poach listings from London.
The enlarged group would also promote Paris as an alternative to London for foreign companies looking to raise money, particularly those from China and Russia.
By Iain Dey (Filed: 21/05/2006)
NYSE group, the owner of the New York Stock Exchange, will submit a proposal outlining a merger of equals to Euronext, its pan-European counterpart, which is expected to thwart a rival offer from Deutsche Börse (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/20/cnenext20.xml).
The board of NYSE, led by John Thain, the chief executive, met last night to ratify the final draft of the proposal, which would create the first major transatlantic stock exchange operator with a market value of $21bn (£11bn).
http://www.telegraph.co.uk/money/graphics/2006/05/21/cnnyse21.jpg
John Thain [top] and Jean François Théodore Jean François Théodore, the chief executive of Euro-next, is expected to recommend the NYSE deal to his shareholders at the company's annual meeting on Tuesday. The deal is likely to be a catalyst for more consolidation among the world's stock exchanges.
It could also force the London Stock Exchange into a deal with Nasdaq, the other major American exchange, which increased its stake in the LSE to 25.1 per cent on Friday.
The NYSE move comes after Deutsche Börse outlined its rival proposal on Friday. Théodore has already privately rejected the Deutsche Börse approach, which would see control of the enlarged group drift from Paris to Frankfurt.
NYSE's deal would leave Euro-next with autonomous control under its existing structure. Thain would be chief executive of the enlarged group, with the chairman's role taken by Jan--Michiel Hessels, the chairman of Euro-next's supervisory board. Théodore will remain in a senior executive role.
The outline structure has already received an informal blessing from Jacques Chirac, the French President. Thierry Breton, the French finance minister, held separate meetings last week with Thain and Reto Francioni, the Deutsche Börse chief executive, to discuss their proposals.
The NYSE plan is likely to include a small cash component as well as shares, but the deal will value the two businesses as equals. At Friday's close, Euro-next had a market capitalisation of around €8.4bn, while NYSE was valued at $10bn.
NYSE is said to believe that huge synergies can be extracted through the merging of trading platforms and technology. Thain would export the technology from Liffe, Euro-next's -London-based derivatives exchange, to the US operations.
The goal would be to create a system that could trade equities, derivatives and options from all of its exchanges in the US and Europe through one trading screen.
Most of the cost savings in the Deutsche proposal would have come from job cuts. The German exchange employs almost 3,000 people, more than twice as many as Euro-next. The combined group would have faced political difficulties in trying to force through job cuts to justify the deal.
Some sources believe Deutsche Börse may cave in on some of its demands regarding the division of senior jobs in a last ditch effort to save a deal. The German exchange risks becoming isolated by the current phase of consolidation.
There is also an outside chance that the Chicago Mercantile Exchange, which has held talks with Euro-next, may make a late merger proposal.
NYSE's document will outline how a 24-hour transatlantic market could be created almost instantly.
Blue chip companies such as Axa, ING and Philips, which are already listed jointly between New York and one of Euro-next's exchanges, would be moved to a new international trading platform. The transatlantic liquidity would then be used to attempt to poach listings from London.
The enlarged group would also promote Paris as an alternative to London for foreign companies looking to raise money, particularly those from China and Russia.