In light of recent market rumours, Deutsche Börse AG and NYSE Euronext (NYX) today confirmed that they are engaged in advanced discussions regarding a potential business combination. They cautioned that no agreement has been reached.
They also noted that there cannot be any assurance that an agreement will be reached or, if an agreement is reached, that a transaction will be completed. Any transaction would be subject to the approval of the two companies’ boards, regulatory and shareholder approvals, as well as other customary conditions.
This proposed transaction creates a group that is both a world leader in derivatives and risk management and the premier global venue for capital raising. As a true pacesetter across the spectrum of capital markets services, the combined group will offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions. The combined group, which would be the world’s largest exchange operator by revenues and profit and would continue to operate all exchanges under local regulatory frameworks and supervision, and would work closely with regulators to facilitate transparency and standardisation of global markets.
It is expected that Deutsche Börse and NYSE Euronext would combine their businesses in all-stock transaction under a new legal entity incorporated in the Netherlands. If fully consummated, Deutsche Börse shareholders would hold approximately 59 to 60%, and NYSE Euronext shareholders would hold approximately 40 to 41%, of the combined company’s equity.
The combined group would have dual headquarters in New York and Frankfurt. The Chairman would be Reto Francioni, based in Frankfurt, and the CEO would be Duncan Niederauer, based in New York. The new company would have an Executive Committee drawn equally from the current leadership of both companies.
NYSE Euronext and Deutsche Börse AG expect to be able to realize approximately EUR300 million in cost synergies, principally from economies of scale in information technology, clearing operations, market operations and corporate center functions. In addition Deutsche Börse AG and NYSE Euronext expect to generate substantial incremental revenues from clearing services, product innovation and cross-selling opportunities between the global cash and derivatives businesses.
Subject to applicable laws and regulations, the parties plan to make no further statement about these discussions until they are terminated, or until a definitive agreement is reached.