The parent company of the New York Stock Exchange said Tuesday that it will combine with the operator of the Frankfurt stock exchange to create the world's largest financial markets company.
The new company, a combination of NYSE Euronext Inc. and Deutsche Boerse, will have dual headquarters in Frankfurt and New York. NYSE Euronext's CEO Duncan Niederauer will be chief executive, and Deutsche Boerse' CEO Reto Francioni will become chairman.
No name for the combined company was announced. The new company will own exchanges in New York, Frankfurt, Paris, Amsterdam and other cities that will continue to operate under their existing names.
Deutsche Boerse shareholders will own 60 percent of the new company. Shareholders of NYSE Euronext will own the rest. The company will be reincorporated in the Netherlands and will be listed in Frankfurt, New York and Paris.
NYSE Euronext's revenues have fallen because of competition from cheaper computerized stock exchanges in the U.S. and Europe. Many other global stock exchanges have also combined to save costs. The deal is expected to lead to $400 million in savings, mainly from technology and clearing costs.
The deal will give NYSE Euronext a larger footprint in the more lucrative business of trading in futures and options contracts.
The boards of both exchange owners have signed off on the deal, but it must still be approved by shareholders and regulators.
Shares of both companies fell after the deal was announced. NYSE Euronext's shares fell 3.7 percent in New York, while Deutsche Boerse's fell 1.5 percent in Frankfurt.
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