NYSE Begins Its Life Today as a Listed Stock

Wall Street Journal

By STEVE GELSI

March 8, 2006; Page C5

The New York Stock Exchange yesterday ended its 213-year history as a private club. Today it joins another: that of richly valued public exchanges.

As a result of completing its merger with Archipelago Holdings Inc., the NYSE begins life as a listed stock today -- the old Archipelago stock becomes NYSE Group Inc.; trading symbol NYX -- on the Big Board with a market value of more than $10 billion.

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NYSE CEO John Thain discusses the completion of the merger and going public.

Public exchanges in the U.S. and abroad have seen share prices surge amid a growth in trading and the expectation that future mergers will help bring more efficient electronic trade-matching systems that will enhance profitability.

The optimism has pushed shares of Archipelago to $70 recently from below $20 before its purchase by the NYSE was announced in April. Yesterday, on its last day as Archipelago, the stock was down $2.87 to $64.25. But some analysts fear the Big Board stock will be expensive based on common valuation measures. It would have a price-to-earnings ratio of 110 based on the combined 2005 earnings of Archipelago and NYSE, says Francis Gaskins, president of research firm IPODesktop.com. That compares with 54 for Nasdaq Stock Market Inc., 86 for IntercontinentalExchange Inc., 32 for CBOT Holdings Inc. and 49 for Chicago Mercantile Exchange Holdings Inc.

NYSE Group looks cheaper when looking at expected future earnings or measuring the new company's book value, which gauges the value at which companies carry assets on the balance sheet. The NYSE Group's price-to-book value will be 9.1, lower than the 20.4 for Nasdaq, 15 for IntercontinentalExchange, 9.8 for the CBOT, and 13.4 for the Chicago Mercantile Exchange, Mr. Gaskins says.

Write to Steve Gelsi at Steven.Gelsi@dowjones.com