The Nasdaq Stock Market is aquiring Instinet Group Incorporated and will be selling Instinet’s Institutional Broker division to Silver Lake Partners.
After these deals, NASDAQ will own INET ECN. Instinet is also selling its Lynch, Jones & Ryan (LJR) subsidiary to Bank of New York before the NASDAQ transaction takes place.
According to a press release, Instinet stockholders will receive approximately $1.878 billion in cash, comprised of approximately $934.5 million from NASDAQ, approximately $207.5 million from Silver Lake and the balance from INET’s available cash, including approximately $174 million from Bank of New York.
The combination of NASDAQ with the INET ECN will provide all investors with a technologically superior trading platform that is positioned to compete effectively in a post-Regulation NMS environment. NASDAQ expects to realize significant savings with the help of the INET technology. It also expects the transaction to reduce clearing costs and corporate expenses associated with the combined entity. NASDAQ anticipates this transaction will be accretive to NASDAQ shareholders within 12 months of closing.
Bob Greifeld, president and CEO of NASDAQ, commented, “This transaction will allow NASDAQ to compete more effectively with other U.S. and international market centers by making our technological platform more competitive, which will result in greater cost efficiencies and improved quality of execution in our market — qualities that today’s individual and institutional investors demand. NASDAQ will continue to innovate and will also have the ability to tap new opportunities in other asset classes.”
He added, “Regulation NMS has defined the new competitive landscape by calling for all market centers to be mutually accessible. With this move we maintain our status as the low cost provider and at the same time provide increased order interaction for both NASDAQ and exchange listed securities. We also believe this further enhances our ability to attract new listings. We want to thank all of our partners for their combined efforts on this transaction. Additionally, we are pleased that Glenn Hutchins of Silver Lake Partners will be joining the NASDAQ board, and we look forward to his strategic contributions.”
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
