NEW YORK/FRANKFURT (Reuters) – Germany’s Deutsche Boerse is in advanced talks to buy NYSE Euronext to create the world’s largest trading powerhouse, marking the second major transatlantic deal in 24 hours in a massive shake-up of an industry under pressure from upstart rivals.
The London Stock Exchange said earlier it has agreed to buy Canadian stock market operator TMX, further highlighting the need for exchanges to cut costs and diversify businesses. The deals could spark more takeovers and leave competitors behind.
Together, Deutsche Boerse and NYSE Euronext would dominate exchange trading in continental Europe. The companies said they could cut costs by 300 million euros ($400 million) a year.
The combined group would have headquarters in New York and Frankfurt, with Deutsche Boerse shareholders holding about 60 percent of the combined company and NYSE shareholders owning the rest. The companies disclosed their talks on Wednesday.
The LSE-TMX tie-up would form the world’s fourth-largest exchange and a top center for trading mining and energy shares, with $4.1 trillion of stock changing hands a year.
Aggressive, upstart trading venues have eaten deeply into the market shares of these traditional exchanges, forcing NYSE Euronext, LSE and others to invest heavily in trading technology and to look to higher-margin derivatives in order to grow.