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(Story updated with more details on the deal.)



) -- The

Deutsche Boerse


NYSE Euronext


announced their merger before the market open Tuesday.

The Deutsche Boerse deal values NYSE stock at $39 a share.

Deutsche Boerse shareholders will have 60% ownership of the combined entity, while NYSE Euronext shareholders will have 40%.

The deal -- which will be immediately accretive for both the NYSE and Deustche Boerse -- is expected to close at the end of 2011. A name for the combined entities is still being discussed.

Responding to concerns that the deal would undermine the NYSE's status as an American icon, NYSE CEO Duncan Niederauer said on


, "I don't know what people are nervous about -- it's a global company."

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Niederauer said that the combined entitity would only strengthen the NYSE by giving it a piece of the Deutsche Boerse's large post-trade business and derivatives business in Europe. Synergies from the merger will largely occur in information technology, where there will be, for instance, a single order book for European Union cash equities and a combined U.S. options platform.

Niederauer said he and the leaders of the Deutsche Boerse have been discussing a merger for years, but only entered serious talks about four to five months ago.

The combined group will have 2010 combined net revenue of U.S. $5.4 billion and is expected to generate annual cost savings of around U.S. $400 million. Based on 2010 net revenues, the combined group will earn about 37% of total revenue in derivatives trading and clearing; 29% in cash listings, trading and clearing; 20% in settlement and custody; and 14% in market data, index and technology services.

Of the 15 directors, nine will be designated by Deutsche Boerse and six by NYSE Euronext.

The combined market value of the two entities is $25.5 billion, creating one of the world's largest exchange operators and a leader in derivatives trading and risk management.

Deutsche Boerse CEO Reto Francioni will be chairman of the combined entities, while NYSE CEO Duncan Niederauer will be CEO of the combined entities.

>> Banks Fret Over NYSE-German Hookup

The group will have dual headquarters, in Deutsche Boerse's newly built green tower near Frankfurt and in New York, at 11 Wall St.

According to the

Financial Times,

the new entity will have more than 90% market share in European derivatives.

Some of the world's biggest banks have been concerned that the combined entities would have too much market power, according to


"In the early stages, this deal doesn't appear to have great benefits to broker-dealers," a broker at a large Wall Street bank said, according to


Shares of NYSE fell 2.3% to $38.55 midday Tuesday.

>>Search for Highest Dividends by Rate or Yield

-- Written by Andrea Tse and Debra Borchardt in New York.

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