Two More NYSE Seats Sell for Record $4M
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The market for the New York Stock Exchange’s membership seats continues to be active as the exchange’s merger with Archipelago Holdings approaches, with two seats sold on Friday at a record-tying price.
The sales were executed at $4 million for each seat, matching the record that was set on Thursday. Seats have more than quadrupled in value since hitting a multi-year low of $975,000 in January and have more than doubled from where they stood before the Archipelago deal was unveiled in April, $1.62 million.
In the Archipelago deal, NYSE members will swap their seats for cash and stock in the combined company, NYSE Group Inc. The standard consideration that Big Board seat holders are expected to receive is $300,000 in cash and 80,177 NYSE Group shares per seat. (The NYSE has said it also plans to use any excess cash to fund an additional payment to members.)
Shares of Archipelago, a Chicago electronic-trading concern, have rallied since the merger announcement, as investors use the stock as a proxy for betting on the combined company. Archipelago shares traded at $58.86 on Friday, not far from their all-time high of $62.35, which was set on November 25. Before the NYSE deal was announced in April, Archipelago shares were in the teens.
Based on Archipelago’s stock price and the cash component of the deal, NYSE seats appear to be worth about $5 million apiece, leaving a $1-million gap compared to where the seat market is valuing NYSE memberships.
The Archipelago-NYSE transaction is expected to be voted on at separate meetings by Archipelago shareholders and NYSE members tomorrow. One issue still to be worked out is a request for legal fees made by the lawyers who represented a group of dissident NYSE seat holders that had challenged the merger. The group agreed to settle its lawsuit with the NYSE, but the attorneys are seeking as much as about $18 million in fees and expenses from the Big Board. A court hearing on the matter is expected today.
After the transaction closes, NYSE seat owners will be restricted from selling their NYSE Group shares for one to three years. But the NYSE has said it plans to hold a secondary sale of stock that would allow members to sell some shares. At a meeting with seat owners Thursday, the chief executive of the NYSE, John Thain, spoke of holding such a sale around February or March.
