NYSE, AmEx: Outline Of A Potential Deal

I said I was out of the office today, but I had to blog. I told you last week about persistent buzz that the NYSE was interested in acquiring the American Stock Exchange. NYSE CEO Duncan Niederauer had no comment on this when I asked him about it on air a week ago, but the buzz remains very persistent.

Here is the outline of a potential deal:

1) 5,000 NYSE shares for each AmEx seat, which at about $91 per NYSE share would be about $455,000 per seat.

Price for AmEx seats have been rising recently. At the end of September, seats were selling for $305,000, but the most recent sales was in the neighborhood of $370,000, so $455,000 would would be a 23% premium.

Why the rise in seat prices? The recent acquisition of the Philadelphia Stock Exchange is one factor in the rising seat prices; speculation the AmEx may be sold is another.

2) At about 870 seats, NYSE would be paying about $395 million for the AmEx.

What would the NYSE get by acquiring the AmEx?

a) Cost synergy. The cost of running the AmEx could be greatly reduced if its operations were integrated into the NYSE.

b) Valuable downtown real estate, though with caveats (air rights may be limited, there is concern about the Deutsche Bank building that is being taken down around the corner, and the building may be heavily mortgaged).

c) A respectable options business and listings of about 700 small- and medium-sized companies, many in direct competition with NASDAQ.

Stay tuned!

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