Deutsche Borse and NYSE Euronext have announced the creation of the world's largest stock exchange operator, dodging political issues that could threaten completion of a deal.
A key compromise is an agreement to headquarter the combined group in both New York and Frankfurt. 60% of the group will be owned by Deutsche Borse shareholders and the remainder by NYSE investors. But there was no name given to the proposed group.
The new company will have a single tier board, with 10 seats out of 17 going to Deutsche Borse but with NYSE Euronext taking the all-important chief executive post.
Under the terms of the deal NYSE Euronext stock will be exchanged for 0.47 shares in the new company, while Deutsche Borse shares will be swapped on a one-for-one basis, the exchanges said in a statement.
As previously trailed, NYSE head Duncan Niederauer will be chief executive and Reto Francioni of Deutsche Borse will take on the role of chairman.
The exchanges face intense competition in their traditional stock-trading business from younger trading venues geared toward today's increasingly dominant high-speed electronic traders. NYSE Euronext and others have responded by investing heavily in technology and expanding into more profitable derivatives trading.
The merger deal creates an unprecedented exchange powerhouse with more than $20 trillion in annual trading volume and operations in Germany, France, Britain, Amsterdam, Portugal, Belgium, and the US.
The pair promised the takeover would cut combined costs by €300m ($400m) a year. The companies' combined market capitalisation is about $26 billion.
Together, Deutsche Borse's Eurex and NYSE Euronext's London-based Liffe would dominate European exchange-based futures trading, with more than 90% overall, raising competition questions among market regulators.
After a few years off that included the financial crisis and the beginning of a global regulatory revamp, the world's exchange operators are back in the takeover game.
Singapore Exchange bid for Australia's ASX late last year, and, last week, London Stock Exchange announced it would acquire Canada's TMX Group - hours before Deutsche Borse and NYSE Euronext said they were in advanced talks.
