NYSE acquisition runs into trouble

The New York Stock Exchange's proposed merger with the smaller electronic exchange Archipelago hit a stumbling block yesterday when one of the NYSE's owners launched legal action to try to block the deal.

William Higgins, a NYSE seatholder, filed the lawsuit saying the deal "grossly undervalues" the exchange, the largest share-trading platform in the world.

Mr Higgins' lawsuit also accuses Goldman Sachs of contributing to the undervaluation by advising both sides in the historic deal, which will see the NYSE, headed by its chief executive John Thain, embrace electronic trading and become a public company.

Under the terms of the deal, seatholders are due to receive 70 per cent of the stock in the merged company, along with $400m (£213m) in cash to be divided among the 1,366 seats. Archipelago shareholders will retain 30 per cent of the combined company.

Jay Eisenofer, Mr Higgins' lawyer, said his client agreed that the NYSE should reform its structure, but the terms of the deal were "objectionable".