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NYSE Rival Plans Pursuit of Euronext

June 03, 2006|From the Associated Press and Bloomberg News

As executives of the New York Stock Exchange and Euronext celebrated their proposed $10-billion merger Friday, rival bidder Deutsche Boerse said it had no intention of abandoning its pursuit of Euronext and its four European stock exchanges.

Even as NYSE Group Inc. Chief Executive John Thain and Euronext Chairman Jan-Michiel Hessels held a news conference in Paris to explain their deal, Deutsche Boerse reiterated that its bid, which Euronext executives advised shareholders against, was a good offer.

Deutsche Boerse "believes in the substance and value of a transaction with Euronext," the Frankfurt-based firm said, adding that it would "continue to work toward a combination of the two companies."

The NYSE agreed late Thursday to buy Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon stock exchanges as well as a London futures exchange, for $10 billion in cash and stock.

Deutsche Boerse has not released terms of its bid, but analysts have estimated that it is worth around $11 billion. It is believed that the bid would require the combined company to carry more debt than the NYSE offer would.

Deutsche Boerse's persistence reflected the drive among world stock exchanges to consolidate and extend their reach. The NYSE and Euronext together would handle a staggering $2.1 trillion in stock trades each month. The combined company would have a market value of about $20 billion.

NYSE and Euronext officials stood by their deal to form NYSE Euronext.

"We have signed and are committed" to the NYSE, said Hessels, who would be chairman of the combined company

Thain, who would be CEO of the merged entity, said there wouldn't be a bidding war for Euronext and predicted that the deal would be completed in about six months.

An NYSE-Euronext merger could turn world markets upside down, perhaps opening the way to round-the-clock global trading. The acquisition would create a single platform where investors could deal in stocks, options, futures, commodities and bonds across two continents. The marriage also could hasten the end of the NYSE's open-outcry trading floor by speeding advances in electronic trading.

"This is a once-in-a-lifetime opportunity to build a transatlantic trading powerhouse," said Daniel Loeb, CEO of investment firm Third Point. "As shareholders of NYSE and Euronext, we applaud the merger."

In a sign of optimism, investors pushed up NYSE Group's shares on news of the deal. The stock rose $2.06 to $64.51, although it has fallen from a high of $87.53 in March.

Thain said he might turn to Asia next as he sought to build a global securities exchange.

"We've now linked the U.S. and Europe, and so the most logical place to look next would be Asia," Thain said. "The question on Asia is certainly a legitimate one and a strategic one, but also one that has to be a little bit down the road."

One obstacle to exchange takeovers in Asia has been that most remain private companies.

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