The Germans are coming – and they want a piece of the New York Stock Exchange.
Germany’s Deutsche Boerse, owner of the Frankfurt Stock Exchange, announced a major merger Tuesday with NYSE Euronext Inc. to create a new company.
The $10 billion deal was the talk of Wall Street as the merger is poised to create the largest financial markets firm in the world. Shareholders of Deutsche Boerse will hold 60 percent of the company and 10 of the 17 board seats.
Why is this happening now?
U.S. stock exchange companies have seen battered profits, and a merger would give a boost to NYSE Euronext, said Adam Sussman, of TABB Group, a New York consulting firm to the financial services industry. NYSE would be able to combine operations with Deutsche Boerse at a savings of more than $400 million and diversify its business.
How will this affect the average investor?
It won’t affect everyday trading. It doesn’t matter if the NYSE – nicknamed the Big Board – is part of a larger global company because the stock exchange here will still need to follow U.S. regulatory rules. But one long-term benefit: With more stock exchange companies linked globally, it may be easier for U.S. investors to trade around the world.
Is the deal done?
No. Shareholders with the companies and regulators must approve it, although observers expect that to happen.
What will the new company be called?
To be determined. Some New York politicians, however, want the symbolic “NYSE” name incorporated.