The issues of control, merger and acquisition have been essential and challenging questions for the New York Stock Exchange (NYSE) for several years since 2010, as due to the global crisis the business was not looking very well. For example, in the period from January to September 2012, NYSE has made 32% less than in the same period of the previous year (Lopez par. 9). Merger and acquisition deals were not rare in the world of finance; however, for a major stock exchange market like NYSE, these deals may present severe difficulties and risks, in no small measure because of the company size and its responsibilities towards the global financial markets.
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The last successful merger of NYSE was made with Euronext, a large European stock exchange in 2007, which resulted in the creation of the world’s largest stock exchange and the first transatlantic financial market (Raiborn and McGinnis 65). Later, since 2010, a few other merger and acquisition offers with total $32 billion worth were attempted; however, all of them failed (Lopez par. 3). Among them were the offers from Deutsche Börse, which was blocked by the European Commission (Fairless par. 1), and a consolidated offer by Intercontinental Exchange (ICE) and NASDAQ OMX Group, which was rejected and later terminated due to the interjection of the United States Department of Justice (Chapman and Gogoi, par. 1).
The New York Stock Exchange, a 220-year-old establishment with a long and proud history and a world’s largest stock exchange, in 2012 has received another $8,2 billion worth proposal from its younger rival from Atlanta, 8-year-old Intercontinental Exchange, a company specializing in futures exchange and more specifically, the energy futures; the deal was to be effected in a stock swap acquisition (Lopez par. 1-12). Both companies decided to keep the positions of chairmen and CEOs, expanding the ICE board of directors to fifteen members, as four members of NYSE board would be added; moreover, the shareholders were allowed to choose and receive $33.12 in cash for a NYSE share or $11.27 in cash and around one-sixth of a share of ICE, combined (Rothwell par. 21-24).
The exchange markets believed that this deal should be beneficial for both companies as the union of brands, infrastructure, expertise, and global position would allow the newly merged company to serve the clients better and distribute the efforts more equally. While some of the experts thought that the deal was not as beneficial, as it could have been for NYSE, as the Intercontinental Exchange could have paid more, it was still considered fairly generous and other experts also claimed that such merger and acquisition agreement could result in further similar deals in the exchange business thanks to a successful example of these companies as well as the declining fees pressure (Rothwell par. 20-30).
The acquisition of NYSE Euronext by ICE was planned for the end of 2012, and on December 20, 2012, the companies’ boards of directors had approved the final agreement and issued a press release with an announcement of the deal (De La Merced par. 1-13). Despite few doubts, the deal was not expected to be blocked by any regulation body, and the deal itself was expected to be closed within a reasonable time after signing the agreement; it was decided that the headquarters of the new company would remain both in Atlanta and New York, for the convenience of the clients (De La Merced par. 1-10).
Chapman, Michelle and Pallavi Gogoi. “Nasdaq drops bid for NYSE on DOJ’s antitrust move.” The Seattle Times. 2011. Web.
De La Merced, Michael J. “Upstart Market Operator Clinches $8.2 Billion Deal for N.Y.S.E.” The New York Times. 2012. Web.
Fairless, Tom. “EU Rejects Deutsche Börse Appeal Against Blocked Merger With NYSE-Euronext.” The Wall Street Journal. 2015. Web.
Lopez, Linette. “Sold: New York Stock Exchange Getting Acquired for $8.2 Billion.” The Business Insider. 2012. Web.
Raiborn, Cecily A. and Michael McGinnis. “NYSE Merger Creates First Transatlantic Financial Market.” Journal of Corporate Accounting & Finance. 3 (2007): 65-74. Readcube. Web.
Rothwell, Steve. “For the New York Stock Exchange, a sell order.” The Seattle Times. 2012. Web.