updated 6/8/2005 7:13:18 PM ET 2005-06-08T23:13:18

The proposed merger between the Nasdaq Stock Market Inc. and the electronic trading arm of Instinet Group Inc. could be delayed after an investment advisory company made a separate, higher bid for Instinet's institutional brokerage division.

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Third Avenue Management LLC, an Instinet shareholder, confirmed Wednesday it was making a $307 million bid for Instinet's brokerage unit. The unit was initially slated to be spun off to a group of private investors led by Silver Lake Partners and Instinet executives for $207.5 million.

The bid was first reported by The Wall Street Journal.

While the counterbid was unlikely to substantially harm Nasdaq's proposed $934.5 million acquisition of Instinet's electronic trading unit, the takeover could be delayed if Instinet shareholders accept Third Avenue's counterbid.

The Nasdaq takeover, announced April 22, was part of a $1.9 billion dismantling of Instinet, majority owned by British media company Reuters Group PLC. Silver Lake and Instinet Chief Executive Ed Nicoll would take over and run the brokerage arm of the company, while the Bank of New York would buy another piece of Instinet that handles commission rebates.

Third Avenue's counterbid would give both Nasdaq and Instinet more money, the investment advisory firm said. The offer, made in a May 27 letter to Nasdaq and Instinet, expires this week.

In a statement, Instinet confirmed that it had received Third Avenue's bid but said little about the substance of the offer.

"Our Board of Directors is reviewing the letter in a previously scheduled meeting," the statement said. "However, we note that, under our merger agreement with The Nasdaq Stock Market, Inc., we are subject to restrictions with respect to third party proposals of the type contained in the letter from Third Avenue Management."

A spokeswoman for the Nasdaq had no comment on Third Avenue's bid.

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