NYSE’s $10.2-B bid for Euronext launches global battle of bourses

NEW YORK—The New York Stock Exchange ratcheted up its fight to become the world’s first trans-Atlantic stock trading center Monday, making a $10.2-billion cash-and-stock bid for European exchange operator Euronext NV—an offer that Euronext called the best on the table.
       On Tuesday Euronext rebuffed Deutsche Boerse (DB) AG’s expanded takeover proposal, calling it misleading, and said the offer by NYSE Group Inc. remained more attractive.
       In a statement ahead of Tuesday’s Euronext shareholder meeting in Amsterdam, the pan-European exchange said it had studied both proposals and the latest DB proposal was actually the same as the one issued last week.
       A combination of NYSE and Euronext would create a $21-billion company called NYSE Euronext with trading in stock, corporate bond, futures, options, derivatives and commodities on two continents. The move would extend the reach of each exchanges and give the NYSE a dominance also sought by its rival, The Nasdaq Stock Market Inc., although the average investor would probably feel little impact
       “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 approved.
       Meanwhile, the Nasdaq, which saw the London Stock Exchange (LSE) rebuff its $4.5-billion bid March 30, has been buying up LSE shares and now owns 25.1 percent of the London market. While it waits the six months required under British law to make another bid, the stake gives the Nasdaq some veto power over major changes at the LSE—though not enough to stop a competing acquisition bid.
       Such mergers have the potential to create financial powerhouses—the NYSE could become a global market for a variety of investments, and the Nasdaq is poised to become a worldwide, 24/7 trading platform for nearly any stock. But while a deal would be good the exchanges, expanding their reach and lowering their costs, the rest of the investing public could see very little immediate impact 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. The Nasdaq could corner the British market in trading US equities, while the NYSE could use Euronext’s technologies to more quickly upgrade its aging trading systems.
       Yet there’s some danger of backlash from major Wall Street financial companies should the NYSE and Nasdaq succeed. Analysts say that if the NYSE becomes a critical trading center for stocks and myriad other investments, there’s a concern that the exchange could raise its transaction fees, since it has less competition from other exchanges. Even a tenth of a penny adds up for a Wall Street firm making hundreds of thousands of transactions every day.
       The Nasdaq’s efforts, which are more about becoming the world’s premier stock trading platform rather 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, an analyst with the securities and investments group at the consulting firm Celent. “That would give the NYSE a stranglehold on trading, all in one place.”
       That’s why major Wall Street firms including Citigroup and Merrill Lynch & Co. have taken stakes in smaller exchanges or created their own electronic trading platforms over the past six months, in hopes of ensuring brisk competition for the two potentially global giants.
       The consolidation among global exchanges wasn’t expected to affect the investing public much—if at all.
       “For your average investor, even for institutional investors, it’s really a nonevent,” said Richard Herr, an analyst with Keefe, Bruyette & Woods. “Really, anybody who wants to trade in Europe badly enough already could before this.”
       If either US exchange is ultimately successful, the trading public on both continents would see little change, or opportunity, in their investing activities in the short term. Thain said the NYSE-Euronext deal, if approved by Euronext shareholders, would close by year’s end at the earliest, while Nasdaq’s LSE bid is in limbo until October.
       Even then, however, it would take months, if not years, for the companies to combine and standardize their trading technologies. It would take longer still for either the NYSE or Nasdaq to gain regulatory approvals in both Europe and the United States to allow cross-continental trading.
       “There are going to be some improvements, certainly,” Easthope said. “But the average person isn’t going to see any great changes for quite a while.” AP