NYSE Proposes Alliance With Euronext

by Ulrika Lomas, for LawAndTax-News.com, Brussels

24 May 2006

The NYSE Group on Monday confirmed in a letter to the Chairmen of the Euronext Supervisory and Management Boards the terms of a business combination proposal under discussion between the two exchanges.

In its proposal to Jan-Michiel Hessels, Chairman of the Supervisory Board of Euronext, and Jean-François Théodore, Chief Executive Officer and Chairman of the Managing Board of Euronext, NYSE argued that:

“Combining our two companies will be a significant and historic step that will benefit global securities markets and all of our stakeholders, including shareholders, customers, employees, issuers, and the investing public in the United States, Europe and across the globe.”

According to the New York Stock Exchange management, the advantages of a combined NYSE Group-Euronext will include:

  • A strategic partnership that creates the world's largest and most liquid global securities marketplace with a combined market capitalization of $21 billion (EUR16 billion);
  • A market leadership position in a diverse set of large and growing businesses, including cash equities, listings, equity options and futures, bonds and market data;
  • The world’s premier listing venue, with a total global market capitalization of listed companies at $27 trillion (EUR21 trillion), nearly three times that of the next largest marketplace and more than that of the next four exchanges combined;
  • Significant cost and revenue synergies totaling $375 million (EUR293 million), creating considerable earnings per share accretion, and substantial value creation for the respective shareholders of NYSE Group and Euronext;
  • An experienced global board and world-class leadership team, with group headquarters at NYSE Group’s current headquarters and European headquarters at Euronext’s headquarters, reinforcing Euronext’s role as the premier financial marketplace of continental Europe;
  • A shared commitment to cooperative multilateral regulation, saluting the effectiveness of Euronext’s College of Regulator model to enforce local rules;
  • A common vision of technology strategy and a horizontal business model; and
  • No competition issues, resulting in expedited closure and execution by an experienced management team.

Under terms of the proposal, each share of NYSE Group will be converted into one share of common stock of the combined company, which will be named “NYSE Euronext”.

Holders of Euronext ordinary shares will be offered the right to exchange each of their shares for 0.980 shares of NYSE Euronext stock and EUR21.32 in cash. The transaction is based on a fixed ratio of 1.4000 shares of the combined company for each Euronext ordinary share, with 30% of the aggregate consideration paid in cash.

The board of the combined company would be comprised of 20 directors — 11 directors from NYSE Group and nine directors designated by Euronext. The Chairman would be Mr. Hessels, and the Deputy Chairman would be Marshall N. Carter, NYSE Group’s current Chairman.

Earlier this year, it was reported that the Dubai International Financial Centre (DIFC) was considering making a bid for Euronext.

According to a Sunday Times report published in April, the DIFC, which owns the Dubai Stock Exchange, was "planning a last-minute swoop" on Euronext as part of a bold plan to expand its investments in foreign financial institutions.

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