The New York Stock Exchange ratcheted up its fight to become the world's first transatlantic stock trading center Monday, making a $10.2-billion cash-and-stock bid for European exchange operator Euronext -- an offer that Euronext called the best on the table.
A combination of NYSE Group Inc. and Euronext would create a $21-billion company called NYSE Euronext with trading in stocks, corporate bonds, futures, options, derivatives and commodities on two continents. The move would extend the reach of each exchange and give the NYSE a dominance also sought by rival Nasdaq Stock Market Inc.
"NYSE Euronext will be the world's most liquid and truly global financial marketplace, offering unparalleled benefits for investors and issuers in the United States, Europe and across the globe," said NYSE Group Chief Executive John Thain, who would be CEO of the combined company if the deal is approved.
Euronext's board was receptive to the bid, saying Monday that it was the most attractive offer on the table, implicitly better than a competing bid from Deutsche Boerse made Friday. Euronext shareholders meet today in Amsterdam to weigh the offers.
Nasdaq, which saw the London Stock Exchange rebuff its $4.5-billion bid in March, has been buying up LSE shares and now owns 25.1% of the London market.
While it waits the six months required under British law to make another bid, Nasdaq holds some veto power over major changes at the LSE -- though not enough to stop a competing acquisition bid.
Such combinations have the potential to create financial powerhouses -- the NYSE could become a global market for a variety of investments, and Nasdaq is poised to become a worldwide, round-the-clock trading platform for nearly any stock.
Though a deal could be good for the exchanges, expanding their reach and lowering their costs, the rest of the investing public could see little immediate change should either acquisition, or both, be completed.
Both exchanges could ultimately trade American and European shares on both sides of the Atlantic, resulting in an extended trading day and increased revenues for the combined companies.
Nasdaq could corner the British market in trading U.S. equities, and the NYSE could use Euronext's technologies to more quickly upgrade its aging trading systems.
Yet there's some danger of a backlash from major Wall Street financial companies should the NYSE and Nasdaq succeed.
Analysts say that if the NYSE becomes a crucial trading center for stocks and myriad other investments, the exchange could raise its transaction fees because it has less competition from other exchanges. Even a tenth of a penny would add up for a Wall Street firm making hundreds of thousands of transactions every day.
Nasdaq's efforts, which are more about becoming the world's premier stock trading platform than offering a diverse line of investments, could raise similar concerns.
"This is what they fear, that kind of one-stop shop where there's nowhere else left to go," said David Easthope, a securities and investments analyst at Boston-based consulting firm Celent.
That's why major Wall Street firms including Citigroup Inc. and Merrill Lynch & Co. have taken stakes in smaller exchanges or created their own electronic trading platforms over the last six months, in hopes of ensuring brisk competition for the two potentially global giants.
Shares of NYSE Group, which owns the New York Stock Exchange, fell $1.65 to $62.85. Shares of Nasdaq Stock Market Inc. also dropped $1.65, to $31.40.