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NYSE's owner agrees to acquire rival Amex

January 18, 2008|From Bloomberg News

NYSE Euronext, owner of the New York Stock Exchange, agreed Thursday to buy the American Stock Exchange for $260 million to capture a bigger share of the fast-growing markets for trading options and exchange-traded funds.

Under the deal, members of the 165-year-old Amex would receive shares of NYSE Euronext as well as proceeds from the sale of the Amex building in Manhattan.

The purchase, which is expected to be completed in the third quarter, would make NYSE Euronext the third-largest exchange in the $1.3-trillion U.S. options market and the No. 1 listing venue of ETFs, whose assets doubled in the last year to $622 billion.

The acquisition was announced at the end of regular stock trading, during which shares of NYSE Euronext tumbled $6.24, or 8%, to $71.07. The stock rose $1.93 to $73 in the after-hours session.

NYSE Euronext owns seven securities markets in Europe and the U.S. The Amex purchase marks the second takeover deal by the company's chief executive, Duncan Niederauer, who took the helm Dec. 1 after the departure of John Thain to Merrill Lynch & Co. It also extends a wave of more than $41 billion of takeovers of exchanges in the last year.

"The competition in the marketplace really demands increased scale and makes brand very important," Amex CEO Neal Wolkoff said. "Over the last 10 months we've recognized that for the Amex probably the best outcome would be from a combination."

The deal requires regulatory approval and a vote by the Amex's 864 members. The market price of an Amex membership has nearly quadrupled to $345,000 in the last two years.

The Amex handled 8.4% of the option contracts traded last year, according to Options Clearing Corp. NYSE Euronext, which had an 11.7% share, hopes to boost the combined total by improving Amex's trading system and giving investors a choice between completing trades electronically or through floor brokers.

The Amex lists 381 ETFs with $215 billion in assets under management. NYSE Euronext lists 242 ETFs with $342 billion in assets. The Amex-listed ETFs will move to the NYSE Arca all-electronic market, Niederauer told analysts.

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