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NYSE Is an American Gangster

Sooner or later, NYSE Euronext (NYSE: NYX  ) gets its exchange.

Living up to the rumor-mill chatter that began circulating last week, NYSE is buying the American Stock Exchange in a $260 million stock deal. Amex stakeholders will also receive the proceeds -- in NYSE stock -- of the eventual sale of the exchange's Manhattan headquarters.

The deal is a steal, especially when you consider that Amex generated operating revenues of $178 million last year and larger exchanges, such as the NYSE and Nasdaq (Nasdaq: NDAQ  ) , are valued at higher price-to-sales multiples. The struggling Amex was weighed down by operating losses, but the NYSE thinks it can reverse that trend by the time it absorbs the exchange and realizes the cost-effective synergies. In fact, the NYSE thinks that within two years, that the post-merger savings will be a whopping $100 million annually.

Acquiring the exchange will fatten up NYSE's stock-options business, more than double the number of exchange-traded funds, and grow its closed-end funds by 50%. Those are pretty much the things the Amex is good for these days. Sure, there are a few notable stocks trading on the Amex -- including Seaboard (AMEX: SEB  ) , U.S. Cellular (AMEX: USM  ) , and Imperial Oil (AMEX: IMO  ) -- but it's not exactly a hotbed for the big boys. Just 11 of the country's 1,500 biggest stocks tracked daily in The Wall Street Journal hail from the Amex exchange. The Amex's bread and butter really has become ETFs, such as the S&P 500-tracking SPDRs (AMEX: SPY  ) .

The Amex is as old-school as they come. It lacks both the technology that made Archipelago Holdings such a transformative NYSE purchase two years ago and the global extension that last year's buy of Europe's Euronext gave the NYSE. Still, the NYSE will be landing a needy neighbor that will help it fill up its trading floor and actually be accretive to the bottom line in a couple of years.  

The move also shows that the NYSE is still packing its acquisitive appetite, long after former CEO John Thain moved on to head up Merrill Lynch (NYSE: MER  ) . After all, NYSE didn't even take the time to burp after announcing a deal earlier this week to acquire financial-software specialist Wombat.

Easy there, big fella. Take the time to digest your meal this time.

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