Barclays Capital plc is again picking up part of another defunct U.S. investment bank on the cheap. The British bank agreed to acquire Bear Wagner Specialists LLC, a New York Stock Exchange designated market maker, from J.P. Morgan Chase & Co. (NYSE:JPM), which inherited the business when it saved Bear Stearns Cos.
Terms of the deal were not disclosed, but The Wall Street Journal is reporting that the price is around $30 million. Bear Stearns paid $625 million for its predecessor firm Wagner
Stott Mercator LLC in April 2001.
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The
deal is expected to close in April. Barclays will merge Bear Wagner
with its own specialist business it acquired from now defunct investment bank Lehman Brothers
Holdings Inc. in September.
The Barclays deal illustrates the value
of an asset in a declining industry. Investment banking firms have been
slowly phasing out the NYSE trading floor for electronic trading platforms.
The NYSE had 35 different designated market maker, or DMM, specialists operating on
exchange trading floors less than a decade ago. Today there are just
five: Barclays, Bank of America Corp. (NYSE:BAC), LaBranche & Co. (NYSE:LAB),
Kellogg Group LLC and Goldman Sachs Group Inc. (NYSE:GS) unit Spear Leeds & Kellogg.
The closing will make Barclays Capital the
largest DMM on the NYSE, representing more than 850 NYSE-listed issues
and 28% of the NYSE's average daily trading volume, according to the
press release. - Maria Woehr
Comments
They overpaid. Kellogg didn't pay a dime for SIG Specialists' stocks when they folded in Nov 2007. That business is dead. NYSE is paying highest rates on the street to liquidity providers to trade there. How long can they keep that up?