The London Stock Exchange (LSE) and Germany's Deutsche Boerse
The companies are in talks over the creation of a European-based "global markets infrastructure group" that would rival the world's largest stock exchange groups including CME Group and Hong Kong Stock Exchanges and Clearing.
Shareholders in the Frankfurt-based Deutsche Boerse would take a 54.4-per-cent stake in the new entity and LSE shareholders would take the remaining 45.6 per cent, the companies said.
The terms of a potential deal would see Deutsche Boerse shareholders receiving one share in the new entity for each original share, and LSE shareholders receiving 0.4421 shares per original share.
The move follows several attempts by Deutsche Boerse to merge with or acquire other exchange groups. The company was stymied in its attempt to merge with the New York Stock Exchange due to competition concerns and failed in a previous attempt to take over the LSE.
Shares in the LSE Group were up 14 per cent in Tuesday trading, while Deutsche Boerse stocks rose by 2.8 per cent.