NYSE bid for rival faces test

NEW YORK — The New York Stock Exchange agreed Tuesday to an independent financial review of its proposed $6 billion acquisition of electronic rival Archipelago Holdings Inc., settling a lawsuit brought by a group of dissident seat owners and allowing a vote on the deal to proceed.

The independent financial adviser, to be chosen by the dissidents and the NYSE, will report to the owners of the NYSE's 1,366 seats no later than five days before they will vote on the deal. A vote by seat owners and Archipelago shareholders is scheduled for Dec. 6.

In return, lead plaintiff William Higgins and his group, which represent ownership of 10 seats, agreed to drop their suit to derail the acquisition, allowing the vote to go forward. They also agreed not to disparage the agreement any longer.

Manhattan State Supreme Court Justice Charles Ramos approved the settlement, commending both sides for reaching an accord after two days of testimony in a hearing on the suit. The plaintiffs were in court seeking a postponement of the Dec. 6 votes.

While Higgins had initially pushed for a renegotiation of the entire deal, he said he was pleased with the settlement.

"We got everything we came here for," Higgins told reporters at the court. "I want people to be able to make an informed decision about this deal."

NYSE Chief Executive John Thain said in a statement he was pleased that the exchange's members would be allowed to vote as planned. "This resolution is in the best interest of our members, the future of the NYSE and America's capital markets."

Higgins and his co-plaintiffs contended that the proposed acquisition was unfair to NYSE seat holders by undervaluing the exchange. They were challenging Goldman Sachs Group Inc.'s role in the deal, charging that the investment firm had a conflict of interest by representing both sides and through its ownership of 15 percent of Archipelago's stock.

But once the settlement was reached, Higgins said he was dropping his case no matter what the outcome of the independent assessment was.

"You can't stop people from voting on a bad deal," Higgins said. He said he would wait until the independent report came out before deciding whether to vote for or against the acquisition.

Higgins had also objected to the split of equity between the two companies, with NYSE seat holders getting 70 percent of the combined company and Archipelago shareholders receiving 30 percent. Those terms apparently remain intact as part of the settlement.