Euronext confirmed Monday that it received an €8-billion ($10.2-billion) bid from the New York Stock Exchange to merge the two boards, but said it is still considering other proposals, including ongoing discussions with the Deutsche Börse.

The Supervisory Board of the European exchange will meet Monday to discuss both proposals, Euronext said in a statement.

Meanwhile, the Frankfurt-based Deutsche Börse also confirmed that talks with Euronext continue, and denied reports that its negotiations with the Amsterdam-based exchange constitute an acquisition of Deutsche Börse by the Euronext.

“The creation of a European exchange organization to increase the efficiency of European capital markets stands at the center of this concept,” the Deutsche Börse said, adding that it is only interested in a “merger of partners” with the Euronext.

Euronext is a combination of the Paris, Brussels, Lisbon, and Amsterdam stock exchanges and the United Kingdom-based derivatives market Liffe. A merger or acquisition between Euronext and another exchange has long been in the cards, as the exchange seeks to compete with other global exchanges for listing business.

Europe suffers from fragmentation with too many exchanges in each country, and a merger between two large European exchanges would create efficiency.

However, a merger with a U.S.-based entity is also compelling. In April the Nasdaq took a 15 percent stake in the London Stock Exchange and has since built its stake to 25 percent. U.S. exchanges are under pressure as more companies list their shares in other countries in response to the regulatory burden of the Sarbanes-Oxley Act.

Europe Outpaces U.S.

For the first time last year, the number of listings on European exchanges exceeded those in the United States, ringing alarm bells for U.S. exchange officials.

According to PricewaterhouseCoopers (PwC), companies raised €50.7 billion ($64.7 billion) on European exchanges in 2005, compared to only €27.5 billion ($35.1 billion) raised in the U.S. (see Europe Outpaces US in IPOs 3:1).

Less regulated exchanges such as the Alternate Investment Market (AIM)—the high-growth subsidiary of the London Stock Exchange—and Euronext are benefiting. AIM nearly doubled its issuance volume last year, to £5.2 billion ($9.77 billion), up from £2.3 billion ($4.32 billion) in 2004, according to PwC.

Euronext also saw its issuance rise to 78 deals totaling €17.2 billion ($21.9 billion) in 2005, up from 52 totaling €9.4 billion ($11.9 billion) the previous year. U.S. high-growth companies such as Internet advertising company Burst Media have even begun choosing AIM over the Nasdaq.

In spite of this success, the European Venture Capital Association (EVCA) has been pushing for European exchanges to cooperate and create one high-growth exchange, arguing that it would be much more efficient than a series of regional exchanges.

But the latest merger efforts of the giants don’t really help these efforts, said Michael Elias, managing partner with Kennet Venture Partners in London and the chairman of EVCA’S High-Tech Committee.

Fierce Competition

“We don’t see much impact,” he said, referring to the NYSE-Euronext merger. He believes it might have helped if the London Stock Exchange had merged with the Euronext, as the two entities had discussed. Both have fiercely competitive small-cap exchanges: the LSE’s AIM and Euronext’s Alternext.

The Nasdaq made a $4.5-billion bid for the LSE in March. While the LSE did not agree to a complete buyout, the Nasdaq has since acquired more than 25 percent of the LSE. That prompted Euronext to call off its own merger discussions with the LSE.

But with individual European countries launching specialized small exchanges such as Scandinavia’s new OMX, the Deutsche Börse’s entry standard segment and even the Munich stock exchange having its own small-cap exchange, a pan-European high-growth exchange is far from a reality.

“We’re seeing exactly what we don’t want,” said Mr. Elias. “Times are good and everyone wants to have a national exchange. But it’s inevitable that when some of these regional markets weaken, they will merge.”