The New York Stock Exchange (NYSE) and Deutsche Boerse agree to merge

Under the terms of the deal, Deutsche Boerse will swap 0.47 of its shares for one share of NYSE Euronext. That will make the combined company 60% owned by Deutsche Boerse shareholders, with existing NYSE Euronext shareholders owning the remaining 40%.

The merged company will have combined revenue of $5.4 billion, according to a joint statement, making it the largest exchange by revenue.

"This transaction is a catalyst for the development of a global capital markets community, delivering the best, most transparent, and innovative services for clients and issuers, wherever they are," said NYSE Euronext CEO Duncan Niederauer in the statement.

The transaction will create a new Dutch holding company that will have headquarters in both New York and Frankfurt. The companies did not say what the new company would be named.

Niederauer will be CEO, while Deutsche Boerse CEO Reto Francioni will become chairman.

The merger is just part of what has been a wave of recent consolidation, as exchanges around the world look for ways to reduce transaction costs and increase exposure to the more lucrative derivatives, options and futures markets.

The deal is expected to face heavy scrutiny from both U.S. and European regulators as well as from political pundits. Last week, former House Speaker Newt Gingrich said the possibility of the NYSE being majority owned by a foreign corporation was a "fundamental blow" to the United States. But other political figures, including New York City Mayor Michael Bloomberg and Democratic Senator Chuck Schumer, have been more upbeat.

The transaction is expected to close at the end of 2011, pending shareholder and regulatory approval.

Shares of NYSE Euronext fell 3% to $38.28.