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NYSE falls to rival in $8.2bn takeover

New York, Dec. 20: The owner of the 220-year-old New York Stock Exchange today agreed to an $8.2 billion deal that would give control of the longstanding symbol of American capitalism to an upstart competitor.

NYSE Euronext said that it would sell itself to the IntercontinentalExchange for about $33.12 a share in cash and stock. The combined company would have headquarters in both ICE’s home of Atlanta and in New York.

The takeover signals the revival of consolidation in the world of market operators, after a wave of deals dissipated amid concerns over anti-trust and nationalist sentiment. ICE had partnered with NYSE Euronext’s main rival, the Nasdaq OMX Group, in an $11 billion hostile bid for the Big Board’s parent, but that offer was blocked by the justice department.

And NYSE Euronext had sought to combine with Deutsche Börse, creating a global giant in the trading of derivatives. But that merger was stymied by European anti-trust regulators.

Today’s deal is expected to run into fewer problems. ICE and NYSE Euronext have little overlap: the former focuses on the trading of commodities like energy products, the latter on stocks and derivatives.

Indeed, while the New York Stock Exchange, with its opening bell and floor traders, has been the public image of a stock market for two centuries, it is NYSE Euronext’s businesses in the over-the-counter trading of derivatives — including the Liffe market in London — that is the main attraction in the merger talks.

As part of the deal, ICE will consider spinning off NYSE Euronext’s European stock market operations. Shareholders of NYSE Euronext would own about 36 per cent of the combined company.

ICE’s chief executive, Jeffrey C. Sprecher, would keep that role in the newly enlarged market operator. NYSE Euronext’s chief, Duncan L. Niederauer, would be president.

Both companies relied on armies of advisers. ICE was advised by Morgan Stanley, BMO Capital Markets, Broadhaven Capital Partners, JPMorgan Chase, Lazard, Société Géérale and Wells Fargo. It received legal counsel from Sullivan & Cromwell and Shearman & Sterling.

NYSE Euronext was advised by Perella Weinberg Partners, BNP Paribas, the Blackstone Group, Citigroup, Goldman Sachs and Moelis & Company. It was counselled by Wachtell, Lipton, Rosen & Katz; Slaughter & May; and Stibbe N.V. “Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities,” Sprecher said in a statement.

“The Board of NYSE Euronext carefully considered a range of strategic alternatives and concluded that ICE is the ideal partner for NYSE Euronext in an evolving market landscape,” said Jan-Michiel Hessels, chairman of NYSE Euronext. Sprecher said the deal had been “well received” by regulators.

ICE, founded in 2000, has its roots in electronic commodity trading and a tie-up with Liffe will boost trade in soft commodities such as sugar, buoying its profits.

“I would imagine that, having the softs contracts under one roof, would provide for easier arbitrage, financing and development of trading opportunities behind the contracts, via swaps and options,” said Jonathan Kingsman, a sugar trade veteran who heads agriculture at information provider Platts.

 
 
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