NYSE Buys AMEX, Becomes ETF King (NYX)

The NYSE Euronext (NYSE: NYX) is finally acquiring the American Stock Exchange.  NYSE is paying roughly $260 million entirely in NYSE stock to acquire its tiny rival exchange.  Amex members (full seat owners) will be entitled to receive additional shares of NYSE Euronext common stock based on the net proceeds from the expected sale of Amex’s lower Manhattan headquarters.

There are several things that will happen as a key here: 

• The NYSE will now be the true leader in Exchange Traded Funds (ETF’s) trading, which will bring over massive amounts of more trading on the exchange.  Amex has some 381 ETF’s (compared to 240 NYSE ARCA ETF’s). Now we know who the ETF KING IS.
• This will also bring over numerous closed-end funds and structured product listings to NYSE; Amex had 545 listings. 
• The NYSE will also sell the American Stock Exchange building and will consolidate the operations. 

The NYSE will now be a leader in stock options trading.  The combined entity will see an annualized cost synergies of over $100 million within two years from closing when you include technology, data center and staff integration, consolidation of professional and contract services and vendors.

We had been waiting and waiting for AMEX to come public, but that won’t be happening now.  The rumors on this were circling last week and these terms are within the range that had been discussed.

Jon C. Ogg
January 17, 2008