Capital Markets

Stock Listings: Jumped or Pushed?

New, stringent conditions at the NYSE have raised the bar for Big Board listings.
Gareth GohJanuary 1, 2006

The Nasdaq stock market has made no secret of its desire to lure companies from the New York Stock Exchange. Now the Big Board is making it a little easier.

Take the case of Tasty Baking Co. The Philadelphia-based bakery ended its association with the NYSE in October and began trading on Nasdaq after it was unable to comply with new NYSE standards requiring a minimum market capitalization of $75 million, up from $50 million. Company officials had originally agreed to work with the NYSE to come into compliance, but changed their minds over the stringent conditions.

“We were under $75 million in market capitalization at the time,” says CFO David S. Marberger. “We submitted a business plan [to the NYSE] outlining how we would get the company to listing standards within 18 months, but until then we would be listed as ‘below criteria.’ ” Moreover, Marberger would have had to file quarterly business plans during that period. “We felt this would distract us from effectively running the company,” he says.

Once Tasty Baking made that intention known, however, the NYSE immediately suspended it. Similarly, Nashua Corp., a maker of specialty imaging products, was delisted once it opted not to work with the NYSE to bring its market-capitalization levels into compliance. (A third company, Midwest Air Group Inc., opted to move to the American Stock Exchange.)

For its part, the NYSE maintains that market conditions allowed it to raise the bar. Still, Marberger insists that Tasty Baking is not sacrificing anything by trading on Nasdaq. “Anytime you’re in a situation where you have to change markets, you have to realize that you have two good options,” says Marberger. “We have no regrets.”