NYSE and Deutsche Boerse unveil mega-exchange deal

Deutsche Boerse and NYSE Euronext announced the creation of the world's largest exchange operator. A key compromise is an agreement to headquarter the combined group in both New York and Frankfurt. 60 percent of the group will be owned by Deutsche Boerse shareholders and the remainder by NYSE investors. However there was no name given to the proposed group.

The new company will have a single tier board, with 10 seats out of 17 going to Deutsche Boerse but with NYSE Euronext taking the all-important chief executive post.

Under the terms of the deal NYSE Euronext stock will be exchanged for 0.47 shares in the new company, while Deutsche Boerse shares will be swapped on a one-for-one basis, the exchanges said in a statement.

As previously trailed, NYSE head Duncan Niederauer will be chief executive and Reto Francioni of Deutsche Boerse will take on the role of chairman.

The merger deal creates an unprecedented exchange powerhouse with more than $20 trillion in annual trading volume and operations in Germany, France, Britain, Amsterdam, Portugal, Belgium, and the United States.

The pair promised the takeover would cut combined costs by 300 million euros ($400 million) a year. The companies' combined market capitalization is about $26 billion.

Together, Deutsche Boerse's Eurex unit and NYSE Euronext's London-based Liffe unit would dominate European exchange-based futures trading, with more than 90 percent overall, raising antitrust questions among market regulators.

After a few years off that included the financial crisis and the beginning of a global regulatory revamp, the world's exchange operators are back in the takeover game.

Singapore Exchange bid for Australia's ASX late last year, and, last week, London Stock Exchange announced it would acquire Canada's TMX Group - hours before Deutsche Boerse and NYSE Euronext said they were in advanced talks.

Local concerns over the wave of consolidation sweeping the industry surfaced in Asia. Singapore Exchange tweaked its $7.9 billion bid for rival ASX to allow more Australian directors onto a combined board in an attempt to win over skeptical Australian politicians.

Nationalism has long been one of the biggest hurdles to exchange mergers. The marketplaces are often symbols of national pride and important to attracting business and capital.

Regulators are paying close attention to the latest round of deals, including the London Stock Exchange's bid to take over Toronto Stock Exchange operator TMX Group.