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NYSE Merger Vote Tomorrow: A Factsheet

NYSE Euronext shareholders will vote on their merger with the Deutsche Boerse tomorrow morning at 8am ET. Fifty percent of the shareholders must approve the merger. The Deutsche Boerse shareholders can tender their shares up until July 13th; they need 75 percent shareholder approval.

Here's a brief fact sheet:

1) The name: no name yet, but forget about getting rid of the fabled "NYSE" name. The new holding company will have a name, but NYSE Euronext and Deutsche Boerse will become wholly owned subsidiaries. The NYSE name will remain above the door.

2) the split: NYSE Euronext shareholders will receive 0.47 shares of the new company for every shareholder, while shareholders of DB who tender the shares will receive one share for every share held. So the exact percentage of ownership from both sides depends on the number of DB shareholders who tender their shares. The split could be 60-40 DB/NYSE Euronext if the acceptance level is 100 percent, or 52.5/47.5 percent DB/NYSE Euronext if only 75 percent tender their shares.

There is a special 2 euro dividend that is being offered to shareholders who tender their shares.

3) regulatory approval is required from U.S. and European regulators. The deal needs a nod from the European Commission, national regulators in nine European countries where both companies operate, as well as the U.S. Department of Justice. There is likely to be a little drama there, particularly with European regulators, less so from U.S. regulators, but neither will chime in until after the vote. Deal not likely to close until fourth quarter at the earliest; early 2012 more likely.

4) the combined company will be a diversified powerhouse: 37 percent of revenues from derivatives, 29 percent from the cash trading and listings business, 14 percent from settlement and custody, 20 percent from market data.

5) the NYSE-Euronext stock is a mess because equity trading volumes are horrendous across all exchanges.

6) What this is all about: increasing scale and cost cutting. Scale because the equity stock business is a low-margin, high volume business; derivatives have higher profits but even here margins are increasingly under pressure; and cost cutting (they have waved 400 million euros in savings) is increasingly the way to help out the bottom line.

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