NYSE nears deal for trans-Atlantic market

December 19, 2006|By Walter Hamilton and Tom Petruno | Walter Hamilton and Tom Petruno,LOS ANGELES TIMES

NEW YORK -- For more than 200 years, the New York Stock Exchange has been the symbol of American capitalism.

Now, it's poised to go global.

The exchange's parent company is nearing completion of a $14 billion deal to buy Euronext, an Amsterdam, Netherlands-based company that runs securities markets in five European capitals.

The combination would create the first trans-Atlantic stock market and could become the model for future mergers with stock markets in Asia and around the planet - a reflection of the seismic forces reshaping financial markets.

"It's evolving into a one-world market," said John Steele Gordon, an author and stock market historian.

"There's not going to be a U.S., a British or a Japanese market. It's just going to be `the market.' "

After a months-long process to win approval from European regulators, Euronext shareholders will vote on the deal today. NYSE shareholders will cast their votes tomorrow.

Assurances that the acquisition will not burden European-listed companies with U.S. red tape appeared to have won over some influential waverers, although others remained unpersuaded.

The Dutch government, which holds a veto over the combination and had threatened to use it unless its concerns were addressed, gave its cautious support.

In a letter to the NYSE and Euronext executives, published yesterday, Finance Minister Gerrit Zalm said he planned to approve the agreement but that any possible "spillover of U.S. laws, legislation and regulations should be excluded."

The president of Paris Europlace also spoke out in favor of the NYSE-Euronext tie-up, reiterating the French business organization's decision Friday to lift its earlier opposition after Deutsche Boerse AG rebuffed an alternative proposal from the French for a three-way deal.

An overriding goal of the merger is to make it easier - and potentially, cheaper - for investors to buy and sell stocks and other securities on the NYSE and on Euronext's markets in Belgium, Britain, France, the Netherlands and Portugal.

The exchanges plan to have a single electronic stock-trading platform within three years.

For small investors, the change could mean reduced trading costs and, eventually, the ability to buy and sell stocks easily around the globe.

While many large foreign companies now trade on the NYSE through securities known as American Depositary Receipts, many others - such as cosmetics maker L'Oreal and fashion designer Christian Dior - are either thinly traded in the United States' over-the-counter market or not available at all.

The merger comes at a time when Americans have a huge appetite for foreign stocks, amid far greater gains in many overseas markets than in the U.S. market in recent years.

In the first 10 months of this year, U.S. investors pumped a net $124 billion of fresh cash into foreign-stock mutual funds, nearly 10 times the $13 billion they stowed in domestic funds.

The combined exchange would be massive. The stock value of the companies listed on both markets is $27 trillion, or twice the size of the U.S. economy. The two markets trade about $100 billion worth of stocks and other securities each day.

For Euronext, combining with the NYSE would give European companies greater visibility among U.S. investors, said Jean-Francois Theodore, chief executive of Euronext.

The deal proceeded slowly because European regulators wanted assurances that stringent U.S. securities regulations would not be extended to its companies.

Walter Hamilton and Tom Petruno write for the Los Angeles Times. The Associated Press contributed to this article.

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