NYSE Euronext to acquire American Stock Exchange
By Mark McSherry
NEW YORK (Reuters) - Transatlantic exchange NYSE Euronext <NYX.PA><NYX.N> said on Thursday it agreed to acquire the American Stock Exchange (Amex) for $260 million in stock to boost its options business, exchange traded funds (ETFs) and cash products.
Exchanges worldwide have embarked on a consolidation spree to expand into new markets.
NYSE Euronext operates the New York Stock Exchange and runs bourses in Paris, Amsterdam, Brussels, Lisbon and operates the Euronext.Liffe derivatives exchange.
Both the NYSE and Nasdaq Stock Market Inc <NDAQ.O> have been keen on expanding to the options markets, which offer higher margins than stock markets.
Nasdaq recently agreed to buy the Philadelphia Stock Exchange for about $652 million and to pay about $61 million for the Boston Stock Exchange.
"I think the overall consolidation game within the U.S. exchange market will continue following the trend of 2007 and I would be surprised if any of the regional exchanges remain independent by the end of 2008," said Sang Lee, managing partner of Aite Group in Boston.
Thursday's deal is expected to close in the third quarter of 2008 and to boost NYSE Euronext's 2009 earnings. The transaction has to be approved by Amex members and regulators.
The deal comes a decade after Amex's doomed tie-up with the National Association of Securities Dealers, or NASD, then-owner of Nasdaq, creating the Nasdaq-Amex Market Group. In 2004, Amex members bought out the NASD to regain control of the stock exchange.
Amex members will be entitled to receive extra shares of NYSE Euronext based on the net proceeds from the expected sale of Amex's lower Manhattan headquarters.
Management of both NYSE and Amex, which was known as the New York Curb Exchange until the 1920s, declined to say what price could be expected in the sale of the American Stock Exchange building, which is listed as a national historic landmark.
NYSE Euronext said the deal will realize "annualized run rate cost synergies" of over $100 million within two years of closing.
Amex operating revenues for the year to December 31, 2007 were $178 million with a pre-tax net loss of $36 million for that period.
"It's a good deal for both parties," said Adam Sussman of consultants Tabb Group. "Any owner of Amex equity is probably just happy that they're getting paid.
"NYSE Euronext was doing a good job of attracting options and ETF business from the Amex. This acquisition just speeds up that process."
In a conference call, NYSE Euronext CEO Duncan Niederauer said the Amex acquisition will make NYSE Euronext the third-largest U.S. options marketplace.
Diego Perfumo, analyst at Equity Research Desk LLC, an advisory firm that specializes in exchanges, said Thursday's deal means NYSE Euronext is acquiring about 700 more stock listings in the second tier market.
Perfumo said these smaller and medium-size companies will give NYSE a starting point to compete with Nasdaq in the smaller-sized IPO market.
The NYSE intends to invite qualified Amex-listed issuers, of which there are more than 900, to transfer their listings to NYSE, or NYSE's Arca.
Lehman Brothers advised NYSE Euronext and Morgan Stanley advised Amex.
(Additional reporting by Lilla Zuill, Doris Frankel and Jonathan Keehner; Editing by Tim Dobbyn/Andre Grenon)