Another Mega-Merger, Deutsche Boerse to Acquire NYSE

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Feb 10 2011
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Germany’s Deutsche Boerse AG, the company that owns and runs Frankfurt stock exchange, could soon take over the American’s New York Stock Exchange. NYSE Euronext Inc., which also operates exchanges in Europe, said it is in “advanced discussions” about a possible merger with Deutsche Boerse. The merger would create the world’s largest trading powerhouse with annual trading volume exceeding $20 trillion.

The new company would have dual headquarters in New York and Frankfurt and operates under a new legal entity incorporated in the Netherlands with Deutsche Boerse shareholders holding 59% to 60% of the combined company. NYSE Euronext Chief Duncan Niederauer would be chief executive of the merged company and Deutsche CEO Reto Francioni would be chairman.

NYSE New York Stock Exchange 

Deutsche Boerse and NYSE Euronext claimed they could cut costs by 300 million euros ($400 million) a year in the merger and the combined entity would have $1.6 billion in revenue overseeing 6,700 listed companies. However the merger could see objection from European regulators and U.S. Justice Department who prefer the separation of functions from a clearing house and exchange trading. U.S. regulators also have been wary of allowing foreign companies to own U.S. exchanges.

As comparison, Germany’s Deutsche Boerse AG has market capitalization of almost $11 billion while the NYSE has only $9.2 billion. Shares of NYSE (NYSE: NYX) were up 5.3% to $35.18 before being halted at 10:25 a.m. and after it resumed the NYSE Euronext stock skyrocket 18.7% higher.

In an immediate response, shares of other exchanges particularly CME Group Inc. (Nasdaq: CME), CBOE Holdings Inc. (Nasdaq: CBOE) and IntercontinentalExchange Inc. (NYSE: ICE) moved up north as speculation that Nasdaq OMX Group Inc. (Nasdaq: NDAQ) would be forced to merge with one (or more?) of them to remain big in scale as well.

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Yes, this is very exciting news for professionals like FSE Listings Inc, which is the recognized leader in listing firms on the Frankfurt Stock Exchange, now the largest stock exchange in the world.

The value of the listing has increased for the firms, and it is now more likely than ever that firms will list on the Frankfurt versus the TSX, OTCBB, ASX, or AIM.

Frankfurt Stock Exchange Listings: Why list on the Frankfurt Stock Exchange?

• More Frankfurt Stock Exchange Listings than all the other exchanges in the world accept NYSE and NASDAQ, the current merger would increase that to the largest in the world
• No restrictions on shares, even for officers and insiders, thus ALL SHARES are free-trading.
• The marketing of shares and companies in Germany are allowed within the rules of BAFIN, which is a much more relaxed regulatory structure from the perspective the onus is on the investor and not as much the Issuer
• A prospectus is not required, and the minimum capital-in is only 500,000 euro
• There are no minimum percentage of free float shareholders
• An audit is not required on the First Quoation Board, and financials are only management prepared
• There is no Sarbanes-Oxley like the OTCBB or NASDAQ
• There are no regulatory approvals for news and acquisitions like the TSX or ASX, thus you can operate your mergers efficiently without delay
• The number of retail and instituitional investors within the exchange make it more liquid than all exchanges in the world, especially with the NYSE merger, with the exception of NASDAQ and NYSE at present
• Naked short selling is BANNED
• Listing a company can occur in 3-6 weeks, making it the fastest exchange to list on than any other public listing on an exchange
• On going costs are minimal, 5k euro per annum, with no quarterly requirements or costly exchange fees such as those at the OTCBB, TSX Venture, Hong Kong, BSE or ASX exchanges
• Companies can act as their own underwriter, thus public offerings can be done on the Frankfurt Stock Exchange without the cost of an underwriter
• Frankfurt is eligible for many countries retirement contributions, such as RRSP accounts in Canada, and it is one of the most respected stock exchanges in the world.
• Access to Capital: Investors with the acquisition of the NYSE would make up 40% of the world’s equity market.
• The Deutsche Boerse website is one of the highest traffic websites for exchanges, with an audience of 120 million investor viewers!
• No lock-up period required under German law
• No disclosure of major holdings’ capital movements required in the Entry Standard
• XETRA®– the electronic trading system of Deutsche Börse is a pioneer in Europe
• 254 international trading institutions admitted – more than 4,600 traders in 19 countries interlinked in a virtual listing and trading world

More than 550 Depository programs and 9,000 shares from countries around the world are listed and traded on Deutsche Börse.

FSE Listings is the fastest listing agent in the world with listings as fast as 10 days, on average 3-6 weeks.

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