Not only are the people of all democracies 'some more equal than others' in
general, but the whole is not even one of (intended?) 'autonomous, democratic
nations'; it is, rather, a system of pseudo-democracies more or less owned and
operated by a still higher-order fraternity of investment bankers.
Democracy, the best form of government
February 16, 2011 Los Angeles Times
Foreign takeover another seismic shift for NYSE
Deutsche Boerse shareholders would own 60% of the new, as-yet-unnamed
By Nathaniel Popper, Los Angeles Times
Reporting from New York —
On the tickers snaking above the New York Stock Exchange's old wooden trading
floor, the big news was the exchange itself.
Deutsche Boerse would indeed be buying the Big Board, the
electronic ticker said, confirming reports that broke last week. The proposed
acquisition by its German rival was another sign of capitalism's gravitational
shift away from New York.
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Duncan Niederauer, NYSE Euronext chief executive, appeared on
the floor after the announcement Tuesday and reassured traders that their
historic venue would not be going anywhere, but there were still plenty of
"There's a lot going on in here," said longtime trader Ted
Weisberg, pointing at his head. "What's sad is that you have an institution of
this stature that for whatever reasons finds it necessary to be part of a
larger organization, rather than a stand-alone organization."
The all-stock deal values NYSE Euronext at about $10 billion.
NYSE Euronext shareholders would receive 0.47 share of the new company for each
share they currently own. Deutsche Boerse shareholders would own 60% of the new
The combined company would be able to slash $400 million in
annual operating costs and would be in better position to compete against
rivals that also are bulking up.
The new company would be incorporated in the Netherlands with
dual headquarters in New York and the German financial capital of Frankfurt.
Underscoring the political sensitivity of the issue, a name has not been
The takeover by a foreign rival is the latest seismic shift
to strike the NYSE.
Founded in 1792 under a buttonwood tree, not far from the
current building at Wall and Broad streets, the NYSE, along with other U.S.
exchanges, has had to revamp itself in recent years to fend off dozens of
upstart electronic rivals offering faster and cheaper stock trades.
The exchange transformed itself from a member-run
organization into a publicly traded company in 2006 and bought a European rival
the following year.
And though the NYSE is the most famous place in the world for
trading stocks, that business has been on a long decline, the victim of both
regulation and new technology. The new company would derive the biggest chunk
of its revenue — 37% — from trading in derivatives, sophisticated financial
instruments that derive their value from other assets.
"We've already said we cannot rely on [stock trading], which
is what takes place on the floor that everyone sees every day. That cannot be
our core strategy in the long run," Niederauer said.
This deal is politically sensitive because the NYSE's
headquarters have been a prominent patriotic symbol since the September 2001
terrorist attacks a few blocks away. An American flag flies over every trading
station and a black prisoner of war flag hangs over the entire floor.
Domenic Digesaro, who runs a food cart just across from the
exchange with an American flag sticker on the side, expressed shock that the
deal could happen.
"When I heard, I was like, 'What?!' " Digesaro said. "I
didn't know people could buy into the stock exchange. I thought it was a U.S.
At a news conference unveiling the deal, issues of national
pride were handled delicately.
Niederauer and other NYSE executives sat in the exchange's
gilded board room in front of an American flag and next to a television screen
showing German executives at a simultaneous news conference in Frankfurt.
"We have two centers of gravitation," Reto Francioni,
Deutsche Boerse chief executive, said in awkward English.
Executives took pains to say the deal was a merger of equals
and Niederauer stressed that the Big Board long has had an international
"This is not like a U.S. and a German company are getting
together. These are two very global companies getting together," Niederauer
The question of the NYSE's continuing influence has come up
prominently in debates about the new company's name, with Sen. Charles E.
Schumer (D-N.Y.) insisting that the name begin with "New York."
Niederauer said a name would be decided upon within a few
weeks, and joked that it would not follow the suggestion of a CNBC reporter who
dubbed it the "Big Boerse."
The biggest obstacle to closing the deal, the executives
said, would probably come from European antitrust regulators concerned that the
NYSE and Deutsche Boerse already own the two largest options exchanges in
Europe. Still, Francioni and Niederauer expressed confidence that the deal
would close by the end of this year.
Many NYSE brokers and specialists own stock in NYSE Euronext
and have notched sizable paper gains since word of the impending deal leaked
last week. NYSE shares closed down 3.5% on Tuesday after surging 17% last
Still, the sale is about more than money.
"As a shareholder, clearly you view this transaction through
a different set of glasses than someone who has been here for 42 years,"
Weisberg said. "I came here and I stayed here because of what the institution
represented. In that sense, it's sad."