New York, Frankfurt bourse operators in merger talks (Roundup)

Feb 9, 2011, 19:32 GMT

Frankfurt/New York - The Frankfurt and New York stock exchanges confirmed Wednesday they were in 'advanced merger negotiations' amid signs of a new wave of consolidation among the world's share markets.

But in statement, NYSE Euronext said the sides had not yet reached an agreement on a deal that would create the world's biggest stock exchange.

Trading in shares in the two bourses - Frankfurt-based Deutsche Boerse AG and New York-based NYSE Euronext - were suspended earlier in the day amid speculation about the deal.

The possible fusion comes as rising trading costs and increasing competition are forcing financial market operators to consider forging closer ties.

NYSE and Deutsche Boerse expect the plan will result in savings worth 300 million euros (410 million dollars).

The New York-Frankfurt statements followed an announcement, also on Wednesday, that the London Stock Exchange Group had bought the TMX Group Inc, which operates the Toronto share market.

Last October, Singapore Exchange Ltd launched a 8.5-billion-dollar bid to buy ASX Ltd, which operators Australia's main share market.

Under the plan with NYSE Euronext, Deutsche Boerse would hold about 59 per cent to 60 per cent of the new merged group.

NYSE Euronext's chief executive officer, Duncan Niederauer, is to head up the new joint group, while Deutsche Boerse's chief Reto Francioni would take over as chairman. The new group would be based in both Frankfurt and New York. It was not foreseeable whether there would be personnel cuts, a spokesman in Frankfurt said.

In a statement from New York, the groups said they 'believe that a combination could deliver value to clients, shareholders and other stakeholders in many ways,' pointing to cost savings and a more attractive revenue mix as possible outcomes.

'Clearly they would be a leader across a variety of different asset classes, including obviously European stocks,' Adam Sussman, director of research at Tabb Group, told The Wall Street Journal. 'The combination of Euronext and their various markets they run and then adding Deutsche Boerse to that would be a pretty powerful combination.'

The Frankfurt and New York bourse operators have discussed a possible tie up on two previous occasions, but the negotiations broke down.

In recent years Frankfurt has also held talks on teaming up with the stock market in London, which is Europe's premier share market.

A merger with the NYSE Euronext group would mean that Frankfurt would emerge with a majority stake in the transatlantic share market group that the New York stock market operator set up in 2007.

In combining with the New York Stock Exchange, Frankfurt will team up with bourses in European cities including Amsterdam, Lisbon, Brussels and Paris.

The deal could however cause concern on the part of European Union regulators, especially coming on the heels of the London-Toronto plans.

NYSE Euronext also operates financial markets in Chicago, London and San Francisco.

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