Nyse Euronext has confirmed that is has signed a definitive agreement to acquire the privately-held American Stock Exchange for $260 million in stock plus proceeds from the sale of Amex's headquarters in Lower Manhattan.
News of the deal follows rumours and reports that Amex had been holding talks with a number of suitors, including Toronto Stock Exchange and Germany's Deutsche Börse. Nyse Euronext emerged as the front-runner earlier this month.
The sale of Amex's landmark Art Deco building in Manhattan will ulitmately determine how much Amex members will get from the deal. Some analysts have estimated the sale will add between $50 million and $100 million to the total purchase price.
In a statement, Nyse Euronext says the deal will give it a second US option exchange licence and make it the third largest player in the US options marketplace.
Nyse also says it will save $100 million annually within two years of closing the deal, mainly from sharing technology, data centre services and staff. Amex will also will relocate its traders to the Nyse's trading floor.
The acquisition is the first big deal closed by Nyse Euronext CEO Duncan Niederauer, who replaced John Thain in late 2007.
"The addition of the American Stock Exchange to the Nyse Euronext family is highly beneficial for our customers and shareholders, and demonstrates our ongoing commitment to growing our business and product lines," says Niederauer. "This transaction is consistent with our strategic objectives and will strengthen our competitive position in the US, produce significant operational efficiencies, and create new business opportunities."
Amex's operating revenues for the year ended 31 December 2007 were approximately $178 million and the exchange generated a pre-tax net loss of approximately $36 million, says Nyse euronext. Amex is expected to operate at break-even for fiscal 2008 when the acquisition completes in the third quarter and in 2009 the transaction is expected to be accretive to Nyse Euronext's earnings.
The deal has been approved by both companies' boards of directors but is still subject to ratification by Amex members and customary regulatory approvals.