NYSE's investors OK Euronext deal

First trans-Atlantic market plans to go global

December 21, 2006|By Walter Hamilton | Walter Hamilton,LOS ANGELES TIMES

NEW YORK -- The Big Board is getting bigger.

Shareholders of the New York Stock Exchange's parent company voted overwhelmingly yesterday to buy a European stock exchange company in a landmark $14.6 billion deal that creates the first trans-Atlantic stock market.

The acquisition of Euronext NV was approved by 99.7 percent of NYSE Group Inc. shareholders. The deal was seen as the first step in a planned global expansion.

"In many ways, we'll be the most powerful exchange in the world," NYSE Chief Executive Officer John A. Thain said at a shareholder meeting where the results were announced.

Shares of NYSE Group dropped $1.17, to $102.19.

Euronext shareholders voted in favor of the deal Tuesday. European authorities and the U.S. Securities and Exchange Commission must give final approval, but all have given preliminary support.

Amsterdam, Netherlands-based Euronext operates stock markets in Belgium, France, the Netherlands and Portugal, and a futures exchange in Britain.

The stock value of the companies listed on both markets is about $26 trillion. The two markets trade about $100 billion worth of stocks and other securities each day.

Many of the 100 or so shareholders at yesterday's meeting were former seat-holders whose holdings were converted to stock when the NYSE became a publicly traded company in March.

Harry Levine, who retired in 2004 after 43 years as a floor broker, voted for the deal with mixed feelings.

Although excited by NYSE Group's business prospects, he's saddened by the changing nature of the exchange, particularly the increasing use of electronic trading that is thinning the ranks of floor traders.

Levine's son was laid off from a floor-trading company in March.

"It's progress but it has taken out the human element," Levine said. "To me, it's sad because I spent my life doing it and [the job] I did is no longer viable."

For individual investors, the deal could lower trading costs and make it easier over time to buy and sell stocks around the globe.

U.S. investors have poured money overseas recently as foreign markets have had better returns than the U.S. market.

From a business perspective, the deal is driven by NYSE Group's desire to cut costs, branch into fast-growing securities such as futures and cater to investors who want quick and easy trading in markets around the world.

The two companies plan to shave $275 million in costs over three years, primarily from combining their electronic trading platforms, and to boost revenue by $100 million.

Despite its prospects, NYSE Group faces serious competitive threats in its core stock-trading business from various electronic-trading competitors, said Jamie Selway, managing director of New York brokerage company White Cap Trading.

The NYSE handled 68.2 percent of trades in its own listed companies in November, down sharply from the 80 percent it averaged in the late 1990s.

Walter Hamilton writes for the Los Angeles Times.

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