Deutsche Brse and NYSE Euronext have confirmed that they are engaged in advanced discussions regarding a potential merger.
They cautioned that no agreement has been reached and, if an agreement is reached, that a transaction will be completed at all.
A merger would create a group with global strengths in derivatives and risk management as well as being the premier global venue for capital raising, according to a statement by the groups.
The combined group 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.
It is expected that Deutsche Brse and NYSE Euronext would combine their businesses in all-stock transaction under a new legal entity incorporated in the Netherlands. If fully consummated, Deutsche Brse 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, according to the statement. 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 Brse AG expect to be able to realize approximately 300 million in cost synergies, principally from economies of scale in information technology, clearing operations, market operations and corporate center functions. In addition, Deutsche Brse 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.