Nasdaq Stock Market Inc., which lost its battle to cross the Atlantic with a failed bid for the London Stock Exchange, agreed Friday to buy Nordic stock exchange operator OMX AB for $3.67 billion.
The acquisition is a breakthrough for the Nasdaq, which still owns almost 30 percent of the London exchange and could use the purchase of OMX to persuade LSE shareholders to agree to a deal creating a giant European exchange.
When meeting with reporters in Stockholm, Nasdaq Chief Executive Robert Greifeld declined to comment on any potential plans to pursue LSE, saying "this day is about Nasdaq and OMX."
Magnus Bocker, the CEO of OMX — the largest stock market in the Nordic region — declined comment on whether he would like to see a combination with LSE.
Bocker, whose company is the result of seven merged Nordic stock exchanges in the past three years, said, however, its ambition "is to be No. 1 and 2 in our areas and this is only the beginning of that journey." This could be through both mergers or other forms of cooperation, he said.
Greifeld said "the future of exchanges is about technology, flexibility and scale. Nasdaq and OMX together deliver all of these benefits."
The combination between Nasdaq — home to technology bellwethers Dell Inc. and Microsoft Corp. — and OMX would provide "an excellent platform for further expansion into derivatives and other asset classes," he said.
The cash and share offer of 0.502 Nasdaq shares plus 94.30 kronor ($13.76) in cash for each OMX share values the company at $30.38 per share, offering a 19 percent premium over Wednesday's closing price, the company said. OMX shares was up about 11 percent to $29.32 in Stockholm midday trading.
OMX said the boards of both companies had recommended the deal, which also has the support of their main shareholders. The new group is to be called The Nasdaq OMX Group and have its headquarters in New York with Greifeld as CEO and Bocker as president. Nasdaq OMX shares will be listed on both Nasdaq in the U.S. and on the OMX Nordic Exchange. Its board will have 15 members _ nine from Nasdaq and five from OMX, as well as Greifeld.
The combined group would have a market capitalization of $7.1 billion; revenue for fiscal 2006 would have been more than $1.2 billion. The company says it expects cost and revenue synergies of around $150 million in three years.
The deal comes a month after the New York Stock Exchange completed its $14 billion acquisition of Euronext, which operates the Paris, Amsterdam, Brussels, and Lisbon stock exchanges. NYSE Euronext formed not only the first trans-Atlantic financial market, but the world's largest, and was part of a global rush for exchanges to find partners or be left out of a massive consolidation push.
Octavio Marenzi, chief executive of consulting firm Celent, said Nasdaq has reinvigorated itself in the aftermath of its high-profile failure to buy the LSE.
"The fit between OMX and Nasdaq is a comfortable one with both organizations being technology-driven firms." Marenzi added that LSE is "looking increasingly isolated in a market that is rapidly consolidating."
LSE shares dipped after the deal announcement, with some market-watchers wondering whether Nasdaq might sell its stake in the London bourse. But the shares recovered to trade up nearly 1 percent at $26.28. LSE officials had no immediate comment.
The deal also leaves German stock exchange operator Deutsche Boerse AG nearly surrounded by rivals NYSE and Nasdaq. Deutsche Boerse, which last year dropped a $12 billion bid for Euronext, announced an agreement this month to buy New York-based International Securities Exchange Holdings Corp. for $2.8 billion, to create the world's largest options market.
JP Morgan acted financial adviser for Nasdaq and Cederquist and Arps, Slate & Flom LLP as legal advisers. Morgan Stanley, Lenner & Partners and Credit Suisse were financial advisers for OMX and Vinge and Cleary Gottlieb Steen & Hamilton LLP legal.