Updated 12/20/2012 04:21 PM
Southern Stock Exchange Reaches $8 Billion Deal To Purchase NYSE
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A historic deal unfolded in the financial world today as the iconic New York Stock Exchange is being purchased by the Intercontinental Exchange and losing its independence.
The Atlanta group will acquire NYSE Euronext, the parent company of the 220-year-old New York City institution, for roughly $8.2 billion.
The two parties will have dual headquarters in New York and Atlanta.
The Intercontinental Exchange, or ICE, is a much younger and smaller company than the New York Stock Exchange. Founded in 2000, ICE has roughly 1,000 employees, while NYSE Euronext currently has over 3,000 employees.
ICE insists it will maintain the iconic NYSE brand and building, suggesting the equities trading part of the business is safe.
"They understand the value of the New York Stock Exchange as a brand. Everybody's heard of the New York Stock Exchange, virtually nobody's heard of the ICE," said Ben Willis of Albert Fried & Co.
In a conference call with analysts, NYSE CEO Duncan Niederauer defended the decision by the big board.
"One of the most important aspects of the negotiation, and the resulting agreement for our board was the demonstration by Jeff [Sprecher, chairman and CEO of ICE] and his team that they understood the value of the NYSE franchise," Niederauer said. "It's a special place in New York indeed in the world."
On the Wall Street trading floor, traders were not rattled by the news. They said the business of the stock market is dwindling and the real business is in other assets like futures and commodities.
"It's not really unexpected. We knew that we were in play, that there was going to be a merger of some sort down the line," said Willis.
However, the deal is not set in stone.
The companies must get approval by federal and European regulators, but it is expected to close in the second half of 2013.
ICE is most interested in NYSE Euronext's European derivatives, and any sticking points in the deal would likely come from that part of the business in Europe.
In 2011, ICE and Nasdaq OMX Group Inc. made a $11 billion bid to buy NYSE Euronext but the deal was stalled by antitrust concerns.
The German company Deutsche Boerse AG also tried to merge with NYSE Euronext, but European regulators blocked that deal in February.