TICKER - Distractions, distractions for Big Board ceo niederauer, there’s always another deal

John Thain transformed the New York Stock Exchange through big acquisitions — electronic exchange operator Archipelago Holdings and European bourse group Euronext.

John Thain transformed the New York Stock Exchange through big acquisitions — electronic exchange operator Archipelago Holdings and European bourse group Euronext. Now he is running troubled brokerage giant Merrill Lynch & Co., and his successor, Duncan Niederauer, says he is more interested in making Thain’s deals work than in striking new ones.

“The focus the last few years has been deal making, creating a global footprint and trying to expand the product line,” Niederauer tells Institutional Investor. “In a consolidating industry you’ve got to remain focused on that, but integrating all the stuff that’s been acquired and merged with becomes more of a priority.”

Ah, but temptation lurks in a fast-consolidating business; would-be acquirers must jump quickly. Hence NYSE Euronext’s agreement last month to buy the American Stock Exchange for $260 million in stock. Once the No. 2 U.S. market, the Amex was long ago eclipsed by the Nasdaq Stock Market in equities trading and, despite a reputation for innovation, has lost market share in exchange-traded funds and options. In 2004, NASD, which had acquired the Amex six years earlier, gave it back to its members for free, having failed to find a buyer.

But the Amex retains some charms. The publicly owned NYSE can boost profits by cutting the combined company’s costs in areas like technology and real estate. It will shift the Amex’s options floor traders to recently closed trading-floor space at its own headquarters; the Amex’s nearby building will be sold, with the proceeds going to its members. The Amex remains a player in the design and trading of popular ETFs. And its base of midsize listed companies will help boost the NYSE’s efforts to create a second listings tier for emerging companies. The NYSE also gains a third U.S. exchange license, giving it flexibility to experiment with different market structures for options and stock trading.

“The integration plan that the NYSE could lay out for the Amex is more seamless than if it had been acquired by another party,” notes Michael Henry, a partner with consulting firm Accenture who advises exchanges on strategy.

And the price was attractive. Less than one year ago, Amex seats were worth about $350 million, one third more than what the NYSE is paying.

“We have to be opportunistic when things come along that make sense for our business model and can be had at the right price,” says NYSE co-COO Larry Leibowitz.

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