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Friday April 22, 10:31
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NYSE to arrange merger with Archipelago
(by Brigitta Zuflitzler)
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The New York Stock Exchange plans to merge with Archipelago Holdings Inc. in order to prompt the Big Board’s move to electronic trading and reform its 212-year-old institution.
The NYSE’s 1,366 members will exchange their seats for 70% of the new-founded company, NYSE Group Inc., and $400 million in cash, CEO John Thain said today. The rest will belong to shareholders of Chicago-based Archipelago, the third-largest electronic market for U.S. stocks.
Thain believes that the merger will allow him to reach two goals at once. Firstly, Archipelago gives him better opportunities to compete with the Nasdaq Stock Market and to satisfy the members whose demands for the public transformation of the exchange became more acute as the size of its market-share loss.
``This transaction, transforming the NYSE into a public for- profit entity, is an essential step to maintain our global competitiveness and leadership,’’ Thain said in a statement.
According to the terms of the deal, the NYSE will pay about $2.1 billion, based on market value of $884 million for Archipelago. Members would receive about $1.51 million in stock for each seat, plus almost $300,000 in cash for a total of $1.8 million.
As to the governmental division, NYSE Group is said to have 14 directors, 11 from the Big Board and 3 from Archipelago. NYSE co-Presidents Catherine Kinney and Robert Britz will be joined under the ruling of Archipelago CEO Jerry Putnam.
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