The Nasdaq Stock Market agreed to buy Nordic stock exchange operator OMX for $3.67 billion Friday, as Nasdaq seeks to expand abroad following a series of rival stock market mergers.
The acquisition is a major breakthrough for the U.S. electronic stock exchange, which failed in a previous attempt to form a trans-Atlantic operation by taking over the London Stock Exchange (LSE). Nasdaq still owns almost 30% of the LSE and speculation is mounting as to whether the stake could be sold to fund the OMX acquisition.
"This OMX transaction with Nasdaq gives us a clear footprint in the European theater," Nasdaq Chief Executive Robert Greifeld told "Worldwide Exchange."
The deal brings together the largest electronic stock market in the United States and the owner of the share markets in Stockholm, Helsinki, Copenhagen, Iceland and the Baltic states as well as OMX's market technology business, which accounts for over a third of its annual turnover.
"This makes sense as a second-best option (to the LSE)," Philippe Gijsels, senior equity strategist at Fortis Bank Global Markets, told "Worldwide Exchange."
Nasdaq can "get the financing done, without selling the stake, I think they would still be interested in the London Stock Exchange further on," Gijsels said.
In a bid backed by the board of OMX and major shareholders in both companies, Nasdaq is offering 0.502 new Nasdaq shares and 94.3 Swedish crowns ($13.79) in cash for each OMX share.
The companies said that based on Nasdaq's May 23 closing price, the offer valued OMX at 208.1 crowns per share, or 25.1 billion crowns ($3.67 billion).
The Swedish government - which owns 6.6% of OMX, but has the company on its privatization list - said it would take a look at the deal before deciding on its stance. However, this would not be before Sweden's parliament considers the government's privatisation plans in June. OMX shares, suspended on Thursday, were up 12.22% at 202 crowns by 1120 GMT on Friday.
The merger is expected to result in $100 million of cost savings, and $50 million of revenue synergies, Greifeld said.
Nasdaq is already the second largest share market in the world behind the NYSE, last year trading shares worth $11.8 trillion compared with the NYSE's $21.8 trillion, according to World Federation of Exchanges data. OMX ranks 11th with a market turnover of $1.3 trillion.
Stock markets have been pushed into consolidation in the face of new financial market liberalisation rules coming in later this year in Europe and increasing demands from investors for cheaper trading and bigger international markets. A new threat has also emerged in Europe from a group of investment banks, which wants to establish a pan-European share trading platform called Project Turquoise.
Greifeld declined to comment about Nasdaq's failed LSE bid when asked by "Worldwide Exchange. Instead, he insisted the exchange was moving in on its competition.
"We’re taking away the floor of the New York Stock Exchange, board by board," Greifeld said.
OMX shares rose 10.8% at the close in Sweden, while shares of Nasdaq ended down 3.4%.