NYSE Euronext (NYX) and Deutsche Börse AG today confirmed they are engaged in advanced discussions about a potential merger.  The deal has many of the characteristics of a merger of equals, but since DB is the larger entity, it would be the defacto acquire, something that might rankle U.S. officials.

This transaction would create a group that's both a world leader in derivatives and risk management and the premier global venue for capital raising.  It also would create the world’s largest exchange operator by revenues and profit.  All exchanges would continue to operate under local regulatory frameworks and supervision.

    All Stock Transaction.   The new legal entity would be incorporated in the Netherlands. If fully consummated, Deutsche Börse shareholders would hold approximately 60%, and NYSE Euronext shareholders would hold approximately 40%, of the combined company’s equity.  There would be dual headquarters in New York and Frankfurt.  The Chairman would be Reto Francioni, based in Frankfurt, and the CEO would be Duncan Niederauer, based in New York.  The new company would have an Executive Committee drawn equally from the current leadership of both companies.

    Delivering Value to Clients, Shareholder, Other Stakeholders.   The combination could deliver many advantages, including:

• Trading clients would benefit from significant savings available through common IT infrastructure, simplified clearing processes, capital efficiencies and the formation of a more liquid, pan-European, pan-Euro regulated market.
• DB and NYSE shareholders would benefit from a more attractive revenue mix, accelerated earnings growth and from substantial cost savings.
• The global capital markets would benefit from the creation of the most efficient, transparent and well-regulated markets for issuers and clients around the world.  In particular, the combined company would create an important counterweight to the proliferation of alternative trading venues that operate with less transparency and far fewer regulatory requirements than either Deutsche Börse AG or NYSE Euronext.   [NYSE Euronext Press Release, 2/9]