Americans cross Atlantic again

The first transatlantic stock exchange has been formed with the merger of the NYSE Group and Paris-based Euronext.

The US$20 billion ($32.07 billion) company will be called NYSE Euronext and will be listed on the NYSE and on Euronext Paris.

The company said its US headquarters would be in New York and its international headquarters Paris and Amsterdam, which will be the centres of operations for its international activities. London will be the centre for its derivatives business.

The merger came about after the NYSE Group agreed to pay €7.78 billion ($15.9 billion) for Euronext, beating off a rival bid from the Deutsche Boerse.

NYSE Euronext will unite the 214-year-old New York exchange with bourses in Paris, Amsterdam, Brussels and Lisbon and Europe's second-largest futures market.

The new exchange will handle about US$2.1 trillion in stock trades a month, twice as much as the Nasdaq, from companies ranging from Total, Europe's largest oil refiner, to Exxon Mobil, the world's biggest company by market value.

NYSE Group chief executive officer John Thain said yesterday: "It's a transaction that fits nicely with the strategy as we try to diversify our earnings further. This will not only give us a position in the European markets, it gives us an effective position in the futures markets."

Thain, 51, will be CEO of the new company and Euronext chief Jean-Francois Theodore will be deputy CEO with responsibility for European business.

The 20-member board will have 11 members selected by the NYSE and the rest by Euronext, Europe's second-largest stock exchange.

The agreement still requires the approval of shareholders and regulators in the US and Europe. Thain has already met regulators from both sides of the Atlantic to build support for the deal.

"Both regulatory organisations are operating in quite a co-operative way," he said. "They are both receptive and supportive."

The US Securities and Exchange Commission would have regulatory oversight over the US equity and options market, and the group of regulators overseeing Euronext will retain responsibility for the European market.

"It's never final until the deal closes," said James Angel, a finance professor at Georgetown University in Washington.

"Problem number one is with the regulators and number two is that Euronext shareholders might think the NYSE deal is not good enough for them and might start agitating for a better deal or to get a new offer from Deutsche Boerse."

Brendan Caldwell, a portfolio manager at Toronto-based Caldwell Securities, criticised the merger.

"It's premature for the NYSE to be making acquisitions this large. We would much rather see them do it when they have a chance to show the investment community how much money an independent NYSE can make."

- BLOOMBERG, REUTERS