NYSE Euronext sale creates a trading giant

IntercontinentalExchange Chairman Jeffrey C. Sprecher (left) would keep that role in the new operation while NYSE Euronext’s chief, Duncan L. Niederauer, would be president.

Richgard Drew/Associated Press

IntercontinentalExchange Chairman Jeffrey C. Sprecher (left) would keep that role in the new operation while NYSE Euronext’s chief, Duncan L. Niederauer, would be president.

When the chief executive of IntercontinentalExchange approached his counterpart at NYSE Euronext about a merger in late September, they quickly came to terms, hashing out a deal in only three months.

The union just made sense.


NYSE Euronext, the owner of the New York Stock Exchange, facing a slowdown in its core equities trading business, was mulling a number of options after a deal with the German exchange fell apart last year. IntercontinentalExchange, an upstart in the high-growth derivatives market, had long sought both an international platform and a way to expand its footprint in futures trading, having lost a bidding war for a London exchange.

They both got what they wanted.

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On Thursday, IntercontinentalExchange, or ICE, said that it would pay $8.2 billion for NYSE Euronext, creating an imposing trans-Atlantic giant in stocks, derivatives, and commodities trading. The deal revives a stalled push for consolidation among market operators at a time when bigger is not only better but necessary.

“It’s about the things that don’t happen,” Duncan Niederauer, NYSE Euronext’s chief, said Thursday. ‘‘It’s good that we kept the door open. We always thought that this was a good partnership.’’

In internal discussions with his board three years ago, Niederauer noted that ICE would complement its core businesses and help the company gain scale. He contended that marrying his slow-growing stock trading business with ICE’s enormously profitable commodities markets would rejuvenate NYSE Euronext.


It would also benefit the crown jewel of NYSE’s portfolio, Liffe, a London-based futures exchange. By teaming with ICE, the company would add a much-needed platform to settle customer trades. In essence, NYSE would have a one-stop shop for trading and clearing futures.

The merger also seemed unlikely to invoke the ire of antitrust regulators, unlike a deal with a top rival in equities like the Nasdaq OMX Group. ­NYSE Euronext and ICE have very little overlap.

After months of negotiations, Niederauer and ICE’s chief, Jeffrey Sprecher, unveiled the deal — one that ultimately reflected the diminished position of the once powerhouse market.

“Let me be clear that this combination — while friendly and strategic — is an acquisition, not a merger of equals,’’ Niederauer wrote in an internal memo to NYSE employees Thursday.

NYSE Euronext said 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.

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 percent of the combined company.

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