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NYSE is bullish on going global

The New York Stock Exchange offers $10.2-billion for Euronext NV, which runs exchanges in France, Belgium, Netherlands and Portugal.

By ASSOCIATED PRESS
Published May 23, 2006

The New York Stock Exchange, seeking to beat rival Nasdaq Stock Market Inc. in the race to become the first trans-Atlantic stock market, offered $10.2-billion in cash and shares Monday for European exchange operator Euronext NV, which declared the bid to be the best option on the table.

NYSE Group Inc. said its purchase of Euronext, which runs the exchanges in Paris; Brussels; Amsterdam, Netherlands; and Lisbon, Portugal, would create "the world's largest and most liquid global securities marketplace" with combined listings of $27-trillion. The combined company, worth $21-billion, would be called NYSE Euronext.

The acquisition would allow the NYSE Group to enter into futures and derivatives trading, as well as European stock trading. Combined with its current electronic options trading, the NYSE would be able to deal in stocks, options, futures, commodities and corporate bonds on two continents, up to 12 hours a day - a broad mix that could appeal to major institutional investors as a one-stop trading platform.

Euronext, which holds its annual shareholders meeting today, issued a statement after its board meeting Monday saying "the transaction with NYSE currently offers the most attractive combination," but it stopped short of a formal recommendation to shareholders. Shareholders will be asked for their views on both proposals before management makes a formal recommendation, the company said.

The offer comes amid global efforts to consolidate exchanges that began in earnest March 30, when the Nasdaq Stock Market Inc. made a $4.5-billion bid for the London Stock Exchange. Nasdaq, which was rebuffed, has since acquired more than 25 percent of the LSE, prompting Euronext to call off its long-running interest in the British exchange. Nasdaq's moves have also pressured the newly public NYSE to find a European partner.

Under the 8-billion euro ($10.2-billion) NYSE proposal, each NYSE share would be converted into one share of common stock of the new combined company NYSE Euronext.

NYSE chief executive John Thain said the NYSE would most likely have to issue its own bonds, borrowing at least some of the $3-billion necessary for Euronext shareholders. The NYSE Group currently has about $650-million in cash available. Thain said the exchange operator would be able to completely pay off any debt within three years.

Euronext said that over the weekend, it received further details of Deutsche Boerse's proposal made Friday, which had not contained specific financial terms. It clarified that the value of its offer would be based on the two groups' average share price over the three months leading up to the closure of a deal.

Deutsche Boerse issued a statement Monday denying a report that it would consider an all-share offer valuing Euronext at about 90 euros ($115) a share, but said it remains in contact with Euronext.

According to terms proposed by the NYSE, the company would have its group headquarters at the NYSE's current base in New York and European headquarters at Euronext's base.

The chairman of the combined company would be current Euronext chairman Jan-Michiel Hessels, while NYSE Group chief executive Thain would continue as CEO. The board of a combined company would include 11 directors from NYSE and nine from Euronext.

"NYSE Euronext will be the world's most liquid and truly global financial marketplace, offering unparalleled benefits for investors and issuers in the United States, Europe and across the globe," Thain said.

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. NYSE Euronext common stock would be listed on the New York Stock Exchange and Euronext.

The NYSE said the proposed combination would result in cost savings of $375-million, saying that would create substantial value for all shareholders.

The NYSE's move comes less than three months after it concluded its purchase of the former Archipelago Holdings Inc., an all-electronic stock market, and transformed itself from a nonprofit into a publicly traded company. Even before the March 7 start of trading in NYSE Group stock, Thain had said NYSE Group would look for acquisitions abroad.

[Last modified May 23, 2006, 05:38:02]