On Thursday morning, at the NYSE Group's first meeting as a public company, the chief executive, John Thain, complained that the US was losing lucrative stock listings to markets overseas because of the Sarbanes-Oxley Act.
Of the largest 25 initial public offerings last year, 23 did not list in the US, he said. This year, nine of the 10 largest offerings went elsewhere.
"That is a very negative statistic for the competitive position of the US," Thain said.
By Thursday night, he had found a solution. After a whirlwind weekend of trans-Atlantic travel, Thain sealed a deal for the NYSE Group to buy Euronext, the pan-European stock and derivatives exchange, for US$10.2 billion, forming the first trans-Atlantic marketplace.
After an initial bid on May 22, the NYSE Group reached definitive agreement last night, fending off a challenge from the Deutsche Boerse. The combined entity will have average daily trading volume of US$100 billion and the market capitalization of all the companies listed will be US$27 trillion.
Euronext, which was formed from mergers of the Paris, Amsterdam and Brussels stock exchanges, as well as the London derivatives exchange Liffe, will become part of NYSE Euronext, the US holding company that will be created. Regulators from each country where stocks trade will continue to oversee that activity.
The acquisition is subject to approval by regulators and shareholders. If approved, the merger would take about six months to complete.
The head of the Securities and Exchange Commission, Christopher Cox, said: "We are working with our counterparts in Paris and Amsterdam to establish a cooperative approach to the type of combination being proposed. We have every expectation that a transaction can take place that will benefit investors in all of the affected countries."
Thain said the acquisition would diversify the exchange's earnings, which are currently concentrated on stock market trading, and extend its global reach.
The announcement could also set off a flurry of deals among the remaining major players, including NASDAQ, Deutsche Boerse and the London Stock Exchange. Various bidders, including NASDAQ and the Deutsche Boerse have tried and failed to buy the London Exchange. NASDAQ has since built a 25.1 percent stake in the exchange.
Thursday's agreement is a significant victory for Thain, who joined the exchange in 2004 at a time when its reputation was in tatters over a pay scandal related to the former chairman, Richard Grasso, and a regulatory investigation that went to the heart of the exchange's floor-based trading system.
In two and a half years, Thain has overseen the transformation of the exchange from a member-owned club to a US$10 billion publicly traded company. Soon after the exchange announced the acquisition of Archipelago Holdings, the all-electronic exchange, in April last year, Thain made clear that he intended to create a multiproduct, global market.
He will become chief executive of the new company, and the head of Euronext, Jean-Francois Theodore, will be deputy chief executive. The board will be made up of 11 NYSE executives and nine from Euronext.
The deal values Euronext at 72.08 euros (US$92.29) a share -- a 4.6 percent premium over the exchange's closing price of 68.90 euros. Euronext shareholders will get 0.98 share of the new company and 21.32 euros in cash. NYSE Group shareholders will get one share of the new company for each of their shares.
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