Your 401(k) may soon read “Made in Germany.”
The Germans are about to buy the symbol of American capitalism — the New York Stock Exchange — in a spectacular deal that could end Wall Street’s claim to being the financial center of the world.
The Big Board’s parent company, NYSE Euronext, announced yesterday it is in advanced talks to be bought by Deutsche Boerse, the owner of the German stock exchange, based in Frankfurt.
The combined megamarket would be the stock-trading home to companies worldwide worth about $15 trillion.
But what that means to New York — and to investors concerned about higher trading fees — remains unclear.
The basic outlines of the deal were hammered out in recent days and were to be announced next Tuesday, before rumors about it forced NYSE Euronet’s hand yesterday.
Among key points of the deal:
* Deutsche Boerse would own 59 to 60 percent of the company.
* It would maintain headquarters in both New York and Frankfurt.
* The chief executive of NYSE Euronet, Duncan Niederauer, would be its CEO with Deutsche Boerse chief executive Reto Francioni its chairman.
But other details — even the name of the new company and whether it will retain the iconic NYSE trading floor — have yet to be worked out or revealed.
Officials said that by combining forces, the new company would save $400 million annually. It would also be able to compete with the CME Group, which runs the Chicago Mercantile Exchange.
“The real motivation here is really about competing with the CME Group,” said Larry Tabb, CEO of the Tabb Group.
The deal would have to be approved by stockholders and pass regulatory muster.
It faces a challenge in Washington, where members of Congress are likely to object to foreign ownership of a company with so much influence over the US economy. “It’s going to get interesting,” Tabb said.
NYSE Euronet cautioned that it wasn’t a done deal but also hailed it as a history-making event.
“This transaction creates a group that is both a world leader in derivatives and risk management and the premier global venue for capital raising,” it said.
Deutsche Boerse tried twice before in the last three years to buy the NYSE but negotiations collapsed, reportedly over issues like where the new company would be headquartered.
The Germans are believed to have renewed talks late last year as the world’s financial markets recovered from the 2008 financial meltdown and as rumors of rival exchange mergers spread.
Yesterday’s announcement came just hours after disclosure of another megadeal: The London Stock Exchange Group, which has a market value of nearly $4 billion, said it was buying Canada’s TMX Group, worth $3 billion. TMX Group owns the Toronto and Montreal stock exchanges.
Curiously, both of the new mega-firms are claiming to be the world’s biggest exchanges.
NYSE Euronet said its new venture would be “the world’s largest exchange operator” in terms of “revenues and profits.” The London-TMX would be the largest in terms of the number of companies traded on it, more than 6,700.