NYSE Taps Four Lead Underwriters for Its Share Offering
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The New York Stock Exchange has selected Merrill Lynch & Company, Morgan Stanley, J.P. Morgan Chase & Company, and Lehman Brothers to lead its high-profile stock offering expected in March or April, people familiar with the matter told the Wall Street Journal yesterday.
The selection of four lead underwriters suggests the Big Board wants to spread the investment-banking spoils widely on Wall Street, giving business to a number of firms whose brokerage arms account for a large chunk of the exchange’s business.
Merrill Lynch, which commands the nation’s largest brokerage force,got the nod for NYSE offer even after taking lead role recently in managing a secondary stock offer by Big Board rival Nasdaq. J.P. Morgan also served as a lead underwriter on the $550 million Nasdaq offer.
The NYSE’s offering will be the first of its kind in the exchange’s 213-year history.The Big Board is set to purchase publicly traded exchange operator Archipelago Holdings next week in a $7 billion deal, a transaction that will give the NYSE 70% of a new public company, NYSE Group Incorporated.
The new company will then set to work on its first sale of stock to the public, which in Wall Street jargon will technically be considered a so-called secondary offer. The initial batch of stock will be distributed to NYSE seat holders and employees and Archipelago staff under terms of the companies’ merger. The secondary could raise between $1 billion to $2 billion, depend ing on how many Big Board seat holders decide to sell some of their shares in the new company.
It’s still unclear which of the four banks, if any, will take the traditional lead underwriting role. The firms may be listed alphabetically on the offering registration paperwork filed with the Securities & Exchange Commission so that all four can be seen as taking a leadership role, one person familiar with the process said. Underwriters help drum up investor interest in stock offerings. They typically take on the risk of the offer by purchasing the shares before selling them to new investors. Lead, or managing underwriters, earn higher fees for helping to set the stock’s sale price and other pre-offer work.
