On February 15, 2011, NYSE Euronext and Deutsche Böerse AG announced that they had entered into a business combination agreement. The combined group will be headquartered in both Frankfurt and New York.
The transaction is structured as a combination of NYSE Euronext and Deutsche Böerse under a newly created Dutch holding company which will be effected through a merger and a public exchange offer. NYSE Euronext will merge with a US subsidiary of the new holding company, and each NYSE Euronext share will be converted into 0.47 of a share of the new holding company. The new holding company will also launch a public exchange offer, and Deutsche Böerse shareholders may tender their Deutsche Böerse stock on a one-to-one basis for shares of the new holding company.
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NYSE Euronext and Germany’s Deutsche Börse, two of the world’s largest stock exchange operators, announced this week that they are in “advanced discussions” regarding a possible merger which would create the largest stock exchange in the world. According to Reuters, the board of NYSE Euronext is expected to meet this weekend to discuss the planned takeover.
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In recent weeks, Standard & Poor's Market, Credit, and Risk Strategies (MCRS) group released its findings regarding the likelihood of U.S. companies engaging in mergers and acquisitions in Europe while also identifying possible targets.
MCRS created a list of potential targets based on an analysis of certain characteristics of recent M&A transactions in Europe in the past twelve months involving U.S. acquirers.
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According to a recent survey of 440 senior executives around the world, M&A activity is expected to increase in the next two years while major fundraising initiatives largely remain on hold. The survey showed that “respondents see M&A activity as the area where an increase in transaction volumes is most likely (49%), compared to 12 months ago, followed by an increase in IPOs (31%).” However, only 38% of corporate respondents stated that they expect to raise fresh capital in the next two years. Due to the anticipated lack of fundraising activity in coming years, competition for capital is expected to remain high and the trend of corporations hoarding cash reserves, for investment or as an eventual return to investors, may increase. In response to the survey results, Doug Guzman, Head of Global Investment Banking at RBC Capital Markets, stated that “the ability for corporations to part-fund their own transactions through cash reserves will be extremely attractive to banks, who are increasingly looking to reduce their exposure to risk.”
More information about the results of the survey, which was conducted by the Economist Intelligence Unit and commissioned by RBC Capital Markets, may be found here.
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