The Wall Street Journal-20080118-NYSE- Amex Finally Marrying- Bigger Board Beefs Up With Options Trading- ETFs- Smaller Listings
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NYSE, Amex Finally Marrying; Bigger Board Beefs Up With Options Trading, ETFs, Smaller Listings
New York Stock Exchange owner NYSE Euronext announced an agreement to acquire the American Stock Exchange for $260 million in stock plus the proceeds expected from the sale of its smaller rival's Lower Manhattan headquarters.
The global market operator, the result of last year's merger between NYSE Group and European exchange operator Euronext NV, adds stock- options trading, exchange-traded funds and several hundred smaller listed companies with the purchase of Amex. Talks about a deal were reported earlier this month in The Wall Street Journal.
In a statement after the close of trading yesterday, NYSE said it would save $100 million annually within two years of closing the deal, mostly from sharing technology and staff. Amex also will relocate its traders to the NYSE's Lower Manhattan floor, which has extra space due to the migration of trading to electronic networks from the floor.
Traders and other shareholders of the closely held Amex will need to approve the transaction, as will the Securities and Exchange Commission and Justice Department. NYSE expects the deal to close by the third quarter and to add to its earnings by next year.
Amex has a long history marked by highs and lows. It introduced breakthrough investment products like exchange-traded funds and was a pioneer of now-popular stock options. But its business of listing companies peaked decades ago and the exchange has been dogged over the years by technology problems and scandals related to trading practices and listing standards.
"Amex has some great products and great traders, but they have been hampered a bit by their technology," said Lawrence Leibowitz, an NYSE executive. Part of the plan will be to bring Amex's products onto NYSE's technology in an attempt to increase business.
NYSE was advised by Lehman Brothers Holdings Inc., while Amex was advised by Morgan Stanley.
Amex Chief Executive Neal Wolkoff took over nearly three years ago to get it ready for a public offering or to prepare it for a sale, likely to another exchange. Given the common business lines it shares with NYSE, Amex decided a sale to its longtime rival was the best way to get a maximum price.
The sale of Amex's building will determine the ultimate price that its members get, with some estimating it will add $50 million to $100 million to the total. Amex has about 380 employees, down from 471 at the end of last year after a round of layoffs.
