Deutsche Boerse AG is in advanced talks to buy NYSE Euronext in an all-stock transaction that would create the world’s biggest exchange operator, accelerating a day of takeovers that began with London Stock Exchange Group Plc’s acquisition of TMX Group Inc.
NYSE and Deutsche Boerse said they will produce 300 million euros ($410 million) in cost savings, according to a statement. Duncan Niederauer, New York-based NYSE Euronext’s chief executive officer, will hold the same job at the combined company. Frankfurt-based Reto Francioni, CEO of Deutsche Boerse, will be chairman. Deutsche Boerse will own about 59 percent to 60 percent of the joined corporation.
The combination, following a decade-long wave of mergers among exchange companies, would unite equity and derivatives platforms with operations in nations ranging from the U.S. and Germany to France, the Netherlands and Portugal. Since January 2000, there has been at least $95.8 billion in completed acquisitions at exchanges worldwide, including NYSE Group’s purchase of Euronext NV and Nasdaq Stock Market Inc.’s takeover of OMX AB, according to data compiled by Bloomberg.
“Companies had their hands full with integrating a round of mergers that were done in 2006 and 2007 and also the effects of the financial crisis on their business and regulation,” said Ed Ditmire, an analyst with Macquarie Group Ltd. in New York who has an “outperform” rating on NYSE Euronext. “Takeovers are regaining their place as a central feature in the development of this industry.”
NYSE Euronext shares surged 19 percent to $39.83 at 12:01 p.m. in New York and jumped 20 percent earlier, the most intraday since December 2008. Deutsche Boerse climbed 1.7 percent to 58.44 euros, the highest price since January 2010, before it was suspended. Their total market value of $25.9 billion exceeds Hong Kong Exchanges & Clearing Ltd., currently the world’s largest exchange operator by market capitalization.
The Bloomberg World Exchange Index of 23 companies rallied 2.9 percent. Nasdaq OMX Group Inc. advanced 5.6 percent to $27.28. CBOE Holdings Inc. climbed 8.3 percent to $26.50.
The talks between NYSE and Deutsche Boerse and the agreement between LSE and TMX follow Singapore Exchange Ltd.’s October offer to buy ASX Ltd., operator of Australia’s main bourse, for A$8.4 billion ($8.5 billion).
London Stock Exchange Group said today that it agreed to buy Toronto-based TMX Group as the companies cut costs to counter market share losses. The merger is an attempt to maintain profitability and expand in derivatives as the companies’ loss of business in trading worsens, said Diego Perfumo, an analyst at Equity Research Desk in Greenwich, Connecticut, who advises hedge funds.
In the U.S., where the New York Stock Exchange and Nasdaq Stock Market controlled 80 percent of volume a decade ago, no firm accounts for more than 27 percent, Barclays Plc data show.
“Competition in equity trading is intensifying, so exchanges need to be able to trade more cheaply and at faster speed against alternative trading venues,” Perfumo said. “The LSE and TMX need to become the low-cost provider with the fastest execution platform to compete effectively and hence try to reverse or slow this market-share trend.”
NYSE Euronext and Deutsche Boerse have discussed a possible merger at least twice before, without reaching a conclusion. Germany’s biggest exchange operator commissioned an internal study in 2008 on the feasibility of combining, four people with direct knowledge of the situation said in December of that year. They held a second round of merger talks in 2009, said people familiar with the matter who declined to be identified because the negotiations were private.
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