Nasdaq intends to use the proceeds from the sale, along with tax benefits, NFI working and clearing capital, and additional cash to repurchase shares
New York-based stock exchange Nasdaq has agreed to divest its US fixed income business Nasdaq Fixed Income (NFI) to BGC Partners, an affiliate of Tradeweb Markets.
NFI is engaged in developing and launching new technology and product offerings, which is expected to benefit Tradeweb’s capability to meet its clients’ requirements in future.
The business generated around $23m revenue in 12 months ended 31 December 2020.
Under the terms of the acquisition, Nasdaq will issue 992,247 shares of Nasdaq common stock to BGC Partners, or its assignees every year through 2027.
Once the transaction is closed, the average number of Nasdaq shares that remain is expected to be reduced, and accelerated, subject to discounting adjustment provisions.
BGC or its assignees are expected to receive an average of around 6.2 million shares of Nasdaq in 2021.
Nasdaq North executive vice president and American markets head Tal Cohen said: “Tradeweb Markets is the right partner for NFI, as the combined offering is well-positioned to serve growing investor needs and creates a comprehensive suite of best in class execution solutions for all market participants.”
Nasdaq’s decision to sell NFI is based on its corporate strategy to focus on its resources and capital to strengthen its position as a technology and analytics provider.
The firm intends to use the proceeds from the NFI sale, along with available tax benefits, NFI working and clearing capital, and cash from other sources, to repurchase shares.
The sale proceeds, remaining tax benefits, working and clearing capital to be released upon closing of the transaction are estimated to total around $700m.
Nasdaq said that following the repurchase, the transaction would be 2% dilutive to non-GAAP EPS in the 12-month period after its closing.
The closing of the transaction is expected later in 2021, subject to certain customary closing conditions, including the receipt of required regulatory approvals.
Morgan Stanley & Co. served as an exclusive financial advisor and Skadden, Arps, Slate, Meagher & Flom as counsel to Nasdaq for the transaction.