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This excerpt taken from the NDAQ 10-K filed Mar 15, 2006. INET Acquisition
On December 8, 2005, we completed our acquisition of Instinet Group Incorporated and the immediate resale of Instinet’s Institutional Brokerage division to an affiliate of Silver Lake Partners, or SLP, a private equity firm. As a result of these transactions, Nasdaq owns INET ECN. The aggregate purchase price for all outstanding
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Table of Contentsshares of Instinet was approximately $1.878 billion in cash. Nasdaq paid total cash consideration of approximately $934.5 million, subject to post-closing adjustments, and SLP paid approximately $207.5 million of the purchase price pursuant to the sale of the Institutional Brokerage division. The balance of the $1.878 billion reflects, in part, Instinet’s available cash, and, in part, a cash dividend of approximately $109.0 million, which Instinet previously paid to its stockholders from the net after-tax proceeds of the sale of Instinet’s Lynch, Jones & Ryan, Inc., or LJR, brokerage subsidiary. As of December 31, 2005, Nasdaq incurred direct acquisition costs of $34.3 million in connection with the acquisition of Instinet.
Nasdaq funded the Instinet acquisition through the sale of Instinet’s Institutional Brokerage division, a credit facility, and the previous issuance of convertible notes and warrants to SLP and Hellman & Friedman, or H&F (another private equity firm, which has been an investor in Nasdaq since 2001), and with cash on hand from Nasdaq and Instinet. See Note 3, “Business Combinations,” and Note 7, “Debt Obligations,” to the consolidated financial statements for further discussion.
We believe that INET’s technologically superior and low cost trading platform will enable us to compete more effectively for trade executions in NYSE—and Amex-listed securities and to deliver the increased capabilities demanded by our customers. By the end of 2006, we expect the INET acquisition to begin to accrete to stockholders, primarily as a result of technology cost savings and other synergies, including cost savings from operating a combined trading platform, reduced clearing and settlement expenses, reduced occupancy, compensation and benefits costs, and increased market data revenues. Our 2005 results include activity related to INET from December 8, 2005 through December 31, 2005.
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