Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, February 15, 2011

NYSE Euronext & Deutsche Boerse Announce Merger Agreement

As expected, the Deutsche Boerse AG and NYSE Euronext today announced that they have entered into a business combination agreement following approval from both companies' Boards.  According to the press release:

Under the agreement, the companies will combine to create the world's premier global exchange group, creating the world leader in derivatives trading and risk management, and the largest, most well known venue for capital raising and equities trading. The combined group will offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions.

The transaction will strengthen Frankfurt and New York as key financial centers, while benefiting Paris and London as well as Luxembourg. Each of the group's national exchanges, including those in Amsterdam, Brussels, and Lisbon, will keep its name in its local market and all exchanges will continue to operate under local regulatory frameworks and supervision. The combined group will work closely with regulators in all markets to facilitate transparency and standardization of capital markets globally.

The combined group will have 2010 combined net revenues of EUR1 4.1 billion/US$ 5.4 billion, and 2010 EBITDA of EUR 2.1 billion /US$ 2.7 billion, thus becoming the world's largest exchange group by revenues and EBITDA. Based on 2010 net revenues, the combined group will earn approximately 37% of total revenues in derivatives trading & clearing, 29% in cash listings, trading & clearing, 20% in settlement & custody, and 14% in market data, index & technology services.

The group will have dual headquarters in Frankfurt and New York City.  The Compay will be led by a one-tier board with 17 members -- 15 directors and the CEO and the Chairman.  Of the 15 directors, 9 will be designated by Deutsche Boerse and 6 by NYSE Euronext.  Reto Francioni,CEO of Deutsche Boerse, will be Chairman, and Duncan Niederauer, NYSE Euronext CEO, will be CEO.  The transaction is structured as a combination of Deutsche Boerse and NYSE Euronext under a newly created Dutch holding company that is expected to be listed in Frankfurt, New York and Paris.

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