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NEW YORK -- Goldman Sachs Group Inc. is buying the Wall Street market maker Spear Leeds & Kellogg L.P. for $6.5 billion in stock and cash. Goldman buying
trading companyThe $6.5 billion deal will
expand the investment
firm's market capabilitiesAssociated Press
The deal, which requires regulatory approval, is expected to close before the end of the year, Goldman Sachs said today.
The New York investment bank and securities firm said that the purchase would be accomplished with 34 million shares of Goldman Sachs common stock, valued at $4.4 billion, with the balance in cash.
Spear, Leeds, which was founded in 1931, is the largest U.S. stock and options clearing firm by volume, the largest specialist firm on the New York Stock Exchange and the third-largest market maker on the Nasdaq stock market, the announcement said.
(Goldman Sachs investors include Hawaii's Kamehameha Schools, which owns a nearly 5 percent stake, valued at about $2.9 billion at today's level. Goldman's shares closed up $8.06 at $132.31 on the New York Stock Exchange.)
The Spear acquisition "positions Goldman Sachs firmly at the center of price discovery (and) expands Goldman Sachs' presence in multiple markets," the Goldman Sachs statement said. It also noted that the deal will give it "a significantly expanded client base."
Henry M. Paulson Jr., Goldman's chairman and CEO, said it would expand the firm's reach "in key areas, specifically market making, execution and clearing."
He added that the two firms "have very similar cultures and a shared vision of harnessing technology to drive markets."
Goldman Sachs operated as a private partnership until May 1999, when it went public with a massive stock sale. The company earned $2.71 billion in 1999.
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