New York’s subway system has become a kind of crossroads of modernity.
Its construction has been spurred by the advent of the subway and the invention of the electric car, but its future lies in the hands of a group of small companies, the New York Stock Exchange, which has decided to own the company that runs the system.
The deal, which was announced last month, gives the NYSE an option to buy up to a third of the stock in the company, and will see the NYSSE acquire shares in the remaining five percent of the company.
The company will be called the New Yorkers.
The announcement of the deal came as the stock market soared.
The NYSE gained 5.2 percent to $15.80, or about $1.25 per share, in after-hours trading on Tuesday, the day before the deal was announced.
The market rally helped the stock rebound from the previous low of $15 on Monday.
“We are thrilled to partner with the NYSOE to provide investors with the best possible platform to buy stock in our new company, New Yorkers,” NYSE CEO Andrew Ross says in a statement.
“The NYSOEs management team has a proven track record of success in securing important corporate and strategic investments, including a recent $2.8 billion purchase of the airline JetBlue, a new headquarters for GE and an acquisition of the Chicago Board of Trade.”
The NYSOe will retain control of the New Yorker brand and the iconic NYSE sign.
“This is a landmark transaction for the NYSLT, a leading global transportation brand, and we are thrilled that we will continue to be a part of this important future for New Yorkers and the world,” Ross says.
“Our investors are in for a fantastic ride.”
The deal is the latest example of the financial industry’s embrace of the idea of holding companies in common.
It was also the first time that a stock exchange, which had been focused on the stock markets, has been able to purchase a major public company in a deal that also includes other financial firms.
The move comes after the Wall Street Journal reported that the NYST, which includes the NYTS, is working on a bid to buy out its rivals in a major takeover.
“At a time when Wall Street has been driven into the arms of the next big thing, the NYSN is the next logical step for us,” NYST Chairman and CEO John P. Collins said in a written statement.
The New York State Legislature voted unanimously in April to give the NYSI the right to buy and sell shares in New Yorkers Inc., a group that operates the subway system.
“NYST is excited to partner and to take advantage of the synergies of this deal, particularly with the additional capital that will be provided to the NYSSE in a merger with the NewYork Stock Exchange,” NYSEX President and CEO James G. Brown said in the statement.
NYST’s board members include former Federal Reserve Chairman Ben Bernanke, former Vice President Joe Biden and retired Vice President Walter Mondale.
NYS EXECUTIVE SUMMARY NYST has been a leader in the private equity industry, acquiring several large companies, including Citigroup Inc. and Merrill Lynch, for $15 billion.
The new ownership of New Yorkers will give NYST greater control over its operations, as well as the NY SEX.
New Yorkers, which began operations in 2014, is expected to make its first public stock offering in November 2018.
It has a history of successfully buying companies through acquisitions.
The shares are expected to trade on the NY ST exchange for about $25 each, with a minimum offering price of $16.25.