Euronext and NYSE Group

Due to apparent moves by NASDAQ to acquire the London Stock Exchange, NYSE Group bid €8 billion in cash and shares for Euronext on May 22, 2006, outbidding a rival offer for the European Stock exchange operator from Germany’s Deutsche Börse, the German stock market. Contrary to statements that it would not raise its bid, on May 23, 2006, Deutsche Börse unveiled a merger bid for Euronext, valuing the pan-European exchange at US$11 billion (€8.6bn), €600 million over NYSE Group’s initial bid. Despite this, NYSE Group and Euronext penned a merger agreement, subject to shareholder vote and regulatory approval. The initial regulatory response by the U.S. Securities and Exchange Commission chief Christopher Cox (who was coordinating heavily with European counterparts) was positive, with an expected approval by the end of 2007. The new firm, tentatively dubbed NYSE Euronext, would be headquartered in New York City, with European operations and its trading platform run out of Paris. NYSE CEO John Thain, who would head NYSE Euronext, intends to use the combination to form the world’s first global stock market, with continuous trading of stocks and derivatives over a 21-hour time span. In addition, the two exchanges hoped to add Borsa Italiana (the Milan stock exchange) into the grouping. On June 23, 2007, the Borsa Italiana was however sold to the London Stock Exchange.

Deutsche Börse dropped out of the bidding for Euronext on November 15, 2006, removing the last major hurdle for the NYSE Euronext transaction. A run-up of NYSE Group’s stock price in late 2006 made the offering far more attractive to Euronext’s shareholders. On December 19, 2006, Euronext shareholders approved the transaction by a 98.2% margin. The remainder voted in favor of the Deutsche Börse offer. Jean-François Théodore, the Chief Executive Officer of Euronext, stated that they expected the transaction to close within three or four months. Some of the regulatory agencies with jurisdiction over the merger had already given approval. NYSE Group shareholders gave their approval on December 20, 2006. The NYSE consummated its US$11 billion takeover of Paris-based exchange operator Euronext NV at ceremonies in the U.S. and Europe on April 4, 2007.

NYSE Euronext operates & holds stake in: the New York Stock Exchange (NYSE), Euronext, NYSE Liffe, NYSE Arca, NYSE Arca Europe, NYSE Alternext, NYSE Amex, NYSE Liffe US, LLC (NYSE Liffe US), NYSE Technologies, Inc (NYSE Technologies), EasyNext, BlueNext, Free Market (Marché Libre), SmartPool and NYSE BondMatch.

NYSE Euronext and Deutsche Börse

On 9 February, 2011, Bloomberg reported that the Deutsche Börse was in advanced talks to buy NYSE Euronext in a deal that would create the world’s largest trading powerhouse. The shares of both companies were temporarily frozen on the news due to the risk of large price movements and clarifications of the deal. A successful deal would see the new company becoming the world’s largest stock exchange operator with a market capitalisation of listed companies equal to US$15 trillion.It would make it to where Americans would own 40% of the new company and Germans own 60% and the main office would be located in New York City.

President and deputy CEO of NYSE Euronext Dominique Cerutti would become the new company’s president and head of commercial and internal technology. Roland Bellegarde, also of NYSE Euronext, would become the head of European cash equities. The new company have €300 million (US$410 million) in cost savings. However, the merger is subject to review in both the United States and with the European Union (EU) for concerns it could create a “de facto monopoly”.

Deutsche Börse had also considered an acquisition once in 2008 and again in 2009. MarketWatch commentator David Weidner has called the forming of the Euro-American Stock Exchange “a blow to national pride” when the deal was announced.

On April 1, 2011 NASDAQ and IntercontinentalExchange made a competing hostile bid valued at $11.3 billion with a cash and stock offering of $42.50 per share. This represents a 19% premium over the Deutsche Börse offer and a 27% premium over NYSE’s value before that offer was made in February.

The board of NYSE Euronext twice rejected the Nasdaq OMX-ICE proposal, saying the unsolicited deal would lead to too much debt and regulatory opposition. The bid was withdrawn in May. NYSE Euronext shareholders were scheduled to vote on Deutsche Börse’s all-stock deal, which the board backs, on July 7, and Deutsche Börse shareholders would vote on the deal by July 13.

In October, 2011, CEO Niederauer said the company had received the EU’s so-called statement of objections, which is more than 100 pages long, and would be responding within two weeks, possibly by asking for the opportunity for an oral hearing with the regulators. The EU examination of the proposal formally began June 29 has said its expanded probe has a Dec. 13 deadline. In March, Joaquin Almunia, the EU’s antitrust commissioner, expressed concern that the deal would maybe monopolize the derivatives market due to Deutsche Boerse’s “vertical silo” which routes all trade clearing through its own services. Almunia said then he preferred a “more open business model” for markets.

On Dec 22 2011, Deutsche Boerse won U.S. antitrust approval to buy NYSE Euronext, on condition that a Deutsche Boerse subsidiary, the International Securities Exchange, divest its 31.5 percent interest in Direct Edge.  NYSE Euronext and Deutsche Boerse AG delayed the deadline for completing their merger until March 31 2012 as the exchange operators try to persuade European regulators to approve the deal.

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