The financial marketplace, which runs the stock exchanges in Boston, New York, as well as Philadelphia, reached an agreement to pay a total of 10.5 billion USD on Monday for the software firm Adenza.
In addition to being possibly the most pricey trade in the 52-year history of Nasdaq, it also represents the most recent effort by stock exchanges to go outside transaction-related services to include data and risk management.
Treasury management software systems are produced by Adenza, which was formed by the combination of Calypso Technology and AxiomSL. The acquisition of Adenza by Nasdaq from the private equity firm Thoma Bravo was not one of its kind.
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Nasdaq purchased the owner of the Nordic markets which is OMX, for a price of 3.7 billion USD, invested $1.1 billion in the ISE (International Securities Exchange) in 2016, and paid $2.75 billion for the anti-financial offense software provider Verafin in 2020.
Banks as well as brokerages are the main users of Adenza’s applications, and experts predicted that Nasdaq’s acquisition of the business would enable it to broaden even further from its core business of running stock exchanges.
Thoma Bravo will receive a 14.9 percent share in Nasdaq in fulfillment of the agreement, establishing the private equity firm as one of the stock market operator’s largest shareholders. It is anticipated that Holden Spaht who is a managing partner of Thoma Bravo, will join the Nasdaq board.
“The whole here as part of Nasdaq is worth more than the sum of its parts – there are revenue synergies with Nasdaq, there are expense synergies and Nasdaq is a great global brand that I think will accelerate sales in Adenza,” said Spaht in an interview.
Source: cnbc.com
Investors perceived the agreement as a risky wager, and Nasdaq stocks dropped almost ten percent to $52.39 on Monday. To fund the merger, Nasdaq plans to issue around 5.9 billion USD in debt, which is roughly thirty-one times the business’s EBITDA for this fiscal year. Adenza was appraised at this price by Nasdaq.
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The transaction involves 5.75 billion USD in cash plus the common stock’s 85.6 million shares of Nasdaq. By the moment the agreement is finished, Nasdaq’s leverage will be 4.7 times greater thanks to the debt it’s going to issue. Within 18 months from now, Nasdaq wants to reduce leverage amounts to 4 times. In a period of six to nine months, the transaction is anticipated to finalize.
The medium-term organic growth in revenue expectation for Nasdaq’s Services Organisations, which manufacture and create software to manage finances for investors, is anticipated to go up following the acquisition of Adenza from 7 to 10 percent to 8-11 percent.
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