The New York Stock Exchange (NYSE) proposed a merger with European exchange operator Euronext NV yesterday to create the first trans-Atlantic stock market, with a value of US$21 billion (16.46 million euros).
The NYSE Group Inc confirmed in a letter the terms of the proposed cash and stock deal with Euro-next, which operates the Paris, Brussels, Amsterdam and Lisbon exchanges.
The deal comes amid global efforts to consolidate exchanges, and could heat up that activity. The NASDAQ Market Inc's acquisition of more than a quarter of the London Stock Exchange prompted Euronext to call off its long-running interest in the British exchange and increased pressure on the NYSE to find a European partner.
Euronext, which holds its annual shareholder meeting today, said in a statement that its supervisory board would meet yesterday to consider the offer from the NYSE as well as a proposal from Germany's Deutsche Boerse AG announced on Friday.
Under the NYSE proposal, each NYSE share would be converted into one share of common stock of the combined company, which would be named NYSE Euronext.
Holders of Euronext ordinary shares would be offered the right to exchange each of their shares for 0.980 shares of NYSE Euronext stock and US$27.22 in cash. Based on the NYSE's closing on Friday at US$64.50, that values each Euronext share at nearly 71 euros below the Friday close of 74.60 euros.
Euronext said that over the weekend it received further details of Deutsche Boerse's proposal made on Friday, which had not contained specific financial terms. DB clarified that the value of its offer would be based on the two groups' average share price over three months, Euronext said.
Deutsche Boerse issued a statement on Monday denying a report that it would consider an all-share offer valuing Euronext at about 90 euros a share, but said it remains in contact with Euronext.
NYSE chief John Thain had brushed off the Deutsche Boerse bid on Friday.
According to terms proposed by the NYSE, the company to be called NYSE Euronext would have its group headquarters at the NYSE's current base and European headquarters at Euronext's base.
"NYSE Euronext will be the world's most liquid and truly global financial marketplace, offering unparalleled benefits for investors and issuers in the US, Europe and across the globe," Thain said in the statement.
The board of a combined company would include 11 directors from NYSE and nine from Euronext. Thain would be chief executive of NYSE Euronext while Euronext's CEO, Jean-Francois Thodore, would be deputy chief executive, with direct responsibility for the European business.
Each of the companies' markets would be subject to local requirements -- a move that seemed aimed at addressing concerns that European exchanges would have to comply with stricter US market rules. NYSE Euronext common stock would be listed on the New York Stock Exchange and Euronext.
The NYSE cited cost and revenue synergies from the proposed combination of US$375 million, saying that would create substantial value for all shareholders.
The transaction terms also assume Euronext will pay to its shareholders its ordinary dividend of US$1.28 per share this year and its previously announced extraordinary dividend of US$3.83 per share.