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NYSE - Euronext Merger Gains Momentum


The New York Stock Exchange made an offer this week to merge with Euronext, the Amsterdam based company that operates several major European exchanges. Euronext was considering an alternate bid from Germany's Deutsche Boerse, but shareholders voted against that bid at their yearly general meeting Tuesday in Amsterdam.

The Euronext bid announced this week could create the first transatlantic stock exchange - and the world's largest equities market - with a total value for its listed companies of nearly $27 trillion dollars.

Euronext is Europe's second largest exchange operator, with trading facilities in Paris, Brussels, Amsterdam, and Lisbon. Its suitor, the New York Stock Exchange - or NYSE - is the world's largest exchange.

In March 2006, NYSE Chief executive officer John Thain, took the firm public, saying he intends to preserve its position of preeminence. "As we become a public company, we will really look to make sure we maintain our position as the leading marketplace in the world."

The merger offer comes just a week after NYSE tried to gain control over the London Stock Exchange. But Nasdaq, the other major New York stock market, blocked the move by increasing its own stake in that firm by 25 percent.

NYSE officials have offered $10 billion for Euronext, convinced that efficiencies created by combining the two firms could save hundreds of millions of dollars in transactional and operational costs.

But, Liz Moyer of Forbes financial magazine says there are other good reasons for the deal. "John Thain has talked about expanding the product mix and the scope of the New York Stock Exchange since he took over as CEO in late 2003, and this is his perfect opportunity. It gets him European equities, European options, all sorts of fun stuff like exchange-traded funds, it also gives him a fairly substantial derivatives business, and the technology and the listing business that comes with Euronext."

But Euronext shareholders say they're not rushing to approve the deal. Frankfurt-based Deutsche Boerse is expected to submit a new bid, which could set the stage for a possible bidding war between the rival exchanges.

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