Updated from 4:51 p.m. EST

The New York Stock Exchange pounced on its old rival, the American Stock Exchange, after a big market selloff amid recession fears on Thursday.

NYSE Euronext ( NYX), the owner and operator of the Big Board, said it will pay Amex seat holders $260 million in stock. The smaller exchange generally lists equities of smaller companies that are often illiquid, compared to the Fortune 500 names that trade on the NYSE and Nasdaq ( NDAQ). The Nasdaq emerged in the 1990s as the No. 2 player in the exchange business, with major tech listings like Microsoft ( MSFT) and Intel ( INTC).

Amex seat holders also will receive more stock in NYSE Euronext after the sale of the landmark Amex building on 86 Trinity Place.

Executives on a conference call following the announcement declined to estimate the value of Amex's real estate. Given the current turmoil in the U.S. real estate market, the price tag is sure to be a subject of intense speculation, although Manhattan real estate prices have stayed in the stratosphere.

The deal, approved by boards of both companies, will provide the Big Board with additional listings as well as increase its scale in U.S. options, exchange-traded funds, closed-end funds, structured products and cash equities.

It will give NYSE Euronext a second U.S. license for an option exchange and make it the No. 3 U.S. options marketplace.

"This transaction is consistent with our strategic objectives and will strengthen our competitive position in the U.S., produce significant operational efficiencies, and create new business opportunities," said NYSE Euronext CEO Duncan Niederauer.

Shares of NYSE Euronext closed down $6.24, or 8.1%, to $71.07 in regular trading before the deal was announced. They were recently up 3% to $73.20 in after-hours trading.