Analysts immediately predicted a new offer would come from the German operator Deutsche Börse which had indicated broad terms of a merger on Friday but without detailing a price. After a supervisory board meeting later on Monday Euronext said it found the NYSE terms more attractive but that it would present both sets of proposals to shareholders. A final recommendation would then be made to an extraordinary shareholders meeting, which is yet to be scheduled.

Under the terms of the American bid, The NYSE Group will convert its existing shares in a new company, NYSE Euronext, and then offer 0.98 of these plus €21.32 cash for each Euronext share.

Based on NYSE's closing price on Friday of $64.5 (€50.6), the offer values each Euronext share at €70.9 and the group at €7.87 billion. The terms sliced 4.7 per cent from Euronext shares which were trading at €71.06.

The proposed alliance would create a transtlantic exchange giant covering six markets with a joint capitalisation of $21 billion (£11 billion). Euronext runs stock markets in Paris, Amsterdam, Brussels and Lisbon and London’s Euronext.liffe derivatives exchange.

The new group would have its headquarters in New York. NYSE chief executive John Thain would become the new group's chief executive, Euronext chairman Jan-Michiel Hessels would become its chairman and Euronext chief executive Jean-Francois Theodore would become deputy chief executive.

NYSE Group estimates cost savings of $375 million.

Euronext said Deutsche Börse provided additional information on pricing over the weekend but the outright rejection of the Deutsche Börse proposal had ruffled feathers among the pan-European exchange’s most powerful shareholders, who want the right to choose between prospective offers without the intervention of the board.

A group of dissident shareholders, led by the US hedge fund Atticus Capital, had threatened to oust the Euronext board if the exchange had continued to reject merger offers without consulting investors.

Dubai International Financial Centre, which has been linked with an offer for Euronext, raised its stake in the exchanges operator yesterday to 3.48 per cent from 1.67 per cent.

Meanwhile a Deutsche Börse source told Reuters that the exchange operator had no plans to improve its offer for Euronext. The source said: "Deutsche Börse deems its offer as fair."

Deutsche Börse has proposed what it calls a "merger of equals" with Euronext and wants to set up a holding firm for the combined exchanges that would be managed out of Frankfurt.

The source told the news agency: "Euronext has priority right now but you can imagine that Deutsche Börse is not without alternatives."

He declined to comment on whether the German exchange might team up with the US electronic market operator Nasdaq to take over the London Stock Exchange in which Nasdaq has built a 25.1 per cent stake.

Deutsche, the NYSE and Euronext have all held takeover talks with the London Stock Exchange.

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