NYSE Chief Rebuffs Investment Proposal
The New York Stock Exchange is not interested in selling a stake to private equity firms, the exchange’s chief executive said Tuesday after a newspaper reported that the Big Board rejected such a deal over the summer.
The New York Post reported Tuesday that the NYSE turned down an offer in June by private equity investors Bain Capital and Blackstone Group, which offered $3.3 million in cash or $4.4 million in stock and cash to each of the exchange’s 1,366 seat holders in exchange for a 30% stake in the Big Board.
The investment offer was designed to counter the exchange’s proposed takeover of Archipelago Holdings Inc., an all-electronic exchange. The Archipelago deal has been touted as a fast way for the NYSE to become a publicly traded company and a way for it to acquire market share in stocks not listed on the Big Board.
The exchange refused the Bain-Blackstone proposal, according to the Post, because of what an NYSE official said were questions about the proposal.
NYSE CEO John Thain told reporters Tuesday that the exchange would not entertain private equity proposals. “We do not need capital,” Thain told Dow Jones Newswires. The NYSE confirmed his remarks for Associated Press.
The proposed merger between the NYSE and Archipelago, which could go before the NYSE’s seat holders for a vote in November, would give each seat holder $300,000 in cash and $3.3 million in stock that could be sold in thirds over the first three years after the merger.
The Bain-Blackstone proposal calls for an initial public stock offering in 2008, the Post said.
Under the deal with Archipelago, which is already publicly traded on the Pacific Stock Exchange, the combined NYSE Group Inc. would begin trading immediately after the deal closed.
Although the private equity proposal would give seat holders more upfront money per seat, it would delay the public stock offering that would give the exchange more financial flexibility in expanding its business, something exchange executives have said is key in any merger or acquisition deal.
In a separate development Tuesday, a New York Stock Exchange member accused of threatening the life of another member over the proposed acquisition of Archipelago was charged with aggravated harassment and attempted coercion.
Edward Reiss, 65, could face as much as a year in prison if convicted of the misdemeanor charges, said Sherry Hunter, a spokeswoman for Manhattan Dist. Atty. Robert Morgenthau.
Reiss’ attorney, Cyrus Vance Jr., said the message was mischaracterized and was not intended as a threat.
According to court papers filed in New York City Criminal Court, Reiss left a threatening voicemail message July 19 at the office of a lawyer representing seat holder William J. Higgins. Higgins had filed a legal challenge to the proposed NYSE-Archipelago deal.
“If this deal doesn’t go through, [Higgins] better have somebody start his car because he’s out of his mind,” the message said, according to court papers.
Reiss was arrested Aug. 29 and released on his own recognizance.
