In addition to the options business, Archipelago Holdings would also acquire the self-regulatory organization (SRO) of the PCX, as well as its 20 percent ownership interest in the Options Clearing Corporation (OCC). Today ArcaEx operates as the exclusive equity trading facility of the PCX. Upon completion of the merger, PCX Holdings, PCX and PCX Equities will operate as wholly-owned subsidiaries of Archipelago Holdings.
Jerry Putnam, Chairman and CEO of Archipelago, commented, "We believe today's announcement is a win for all involved and a natural extension of the relationship we entered with the PCX in 2000. Through this acquisition, Archipelago accelerates its entry into the fast growing options market and diversifies its business. And most importantly, we believe investors will benefit from a fully electronic, multi-product exchange for trading equities and options."
Putnam added, "We have seen the growing demand for electronic options marketplaces and are confident that our history of innovation, and the integration of options trading alongside the equities business, can bring new, differentiated opportunities to our clients -- and, as such, opportunities to Archipelago. This is the right time for Archipelago to make a major impact on an options marketplace that is rapidly changing in both technology and market structure."
Philip D. DeFeo, Chairman and CEO of PCX Holdings and the Pacific Exchange commented, "Our relationship with Archipelago has been rewarding since day one. This is a very promising proposal for our shareholders as well as for our customers and public investors. We expect the options market of the Pacific Exchange to begin benefiting quickly from Archipelago's capital resources and broader customer base, and we will begin planning the transition to full integration so that we are able to move quickly once necessary conditions to closing are satisfied. We believe that Archipelago's thinking on market structure is clearly aligned with ours, and expect no changes in our options market structure in the immediate future. We expect that Archipelago's strong relationships within the trading community and proven technical prowess will accelerate the ultimate development of an all- electronic, floor-independent options marketplace."
Archipelago will leverage and build upon the Pacific Exchange's move toward a fully electronic marketplace through its new trading system, PCX Plus. Archipelago believes that synergies between its equities and options business will provide the company with one of the lowest cost structures in the industry.
PCX Holdings shareholders will receive approximately $50.69 million in exchange for their shares of PCX Holdings, or approximately $83.74 per share, subject to possible adjustments. Archipelago will pay the purchase price to PCX Holdings shareholders by issuing 20% of the purchase price in registered shares of Archipelago common stock (which represents $10.14 million) and the remaining 80% in cash (which represents $40.55 million), thereby giving PCX Holdings shareowners a stake in the future success of Archipelago.
Media and Investor Call and Webcast
Archipelago will hold a conference call for the media, analysts and investors Tuesday, January 4, 2005 at 10:00 a.m. est. The dial-in for the conference call is 888.396.2384 (domestic) or 617.847.8711 (international) conference passcode 90599547 or listen to a webcast at: http://www.arcaex.com. A telephone replay will be available beginning at approximately 12:00 p.m. est on January 4, 2005. The replay number is 888.286.8010 (domestic) or 617.801.6888 (international) access passcode is 99833235. A replay of the event also will be available at http://www.arcaex.com.
