NYSE, Deutsche Boerse Agree To Combine
Monday, February 21, 2011

Deutsche Boerse and NYSE Euronext have announced that they have entered into a business combination agreement to create the world’s premier global exchange group, creating the world leader in derivatives trading and risk management, and the largest venue for capital raising and equities trading.

It was said that the transaction will strengthen Frankfurt and New York as key financial centres, while benefiting Paris and London as well as Luxembourg. Each of the group’s national exchanges will keep its name in its local market and all exchanges will continue to operate under local regulatory frameworks and supervision. The combined group will continue to work closely with the regulators in all those markets.

The combined group will have 2010 combined net revenues of USD5.4bn; the world’s largest exchange group by that measure. It was also pointed out that the two companies will make an ideal strategic and operating fit.

The derivatives businesses of Eurex (Deutsche Boerse) and NYSE Liffe (NYSE Euronext) complement each other ideally on interest rate products, with Eurex specializing in the long end of the interest rate curve and NYSE Liffe the short end. The combination of both derivatives businesses will create a clear global market leader trading more than 19m derivatives contracts per day, including more than 6m US options contracts per day.

Furthermore, their combined cash trading and listings business will create an exchange group with the deepest pool of liquidity for US and European equities. The NYSE’s listings franchise, already home to the world’s leading global brands, will be further strengthened by the increased global profile of the new group, and the combination of Euronext and the Frankfurt Stock Exchange will deliver a truly pan-European regulated equities exchange.

Reto Francioni, chief executive officer of Deutsche Boerse, said: “This combination will create significant value for all stakeholders. This transaction brings together two of the most respected and successful exchange operators in the world to lead the way in global capital markets and set the standard for growth, quality and market reach.”

“Clients,” he continued, “will have unparalleled access to markets, products, information, world-class technology, clearing services and settlement – globally and around the clock. From a regulatory perspective, we are committed to remaining the world’s most transparent and best regulated platform. In addition, we expect that the combined group will be a highly attractive partner for capital markets in Asia-Pacific and other parts of the world.”

The group will have dual headquarters, in Frankfurt and in New York. The transaction is structured as a combination of Deutsche Boerse and NYSE Euronext under a newly created Dutch holding company, which is expected to be listed in Frankfurt, New York and Paris. Following full completion, it is expected that former Deutsche Boerse shareholders would own 60% of the combined group and former NYSE Euronext shareholders would own 40%.

The transaction is subject to approval by the shareholders of both companies, as well as approval by the relevant competition and financial, securities and other regulatory authorities in the US and Europe. It is expected to close at the end of 2011.