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NDAQ » Topics » If we do not timely and efficiently integrate INETs operations, we may not realize the benefits we expect to derive from the acquisition.

This excerpt taken from the NDAQ 10-Q filed May 10, 2006.

If we do not timely and efficiently integrate INET’s operations, we may not realize the benefits we expect to derive from the acquisition.

 

We paid $934.5 million in cash to acquire the INET ECN, subject to post-closing adjustments and have incurred significant costs in connection with the acquisition. As of December 31, 2005, these costs were $34.4 million. We are in the process of integrating INET’s business with ours, and we anticipate incurring between $65.0 million and $75.0 million of pre-tax charges in 2006, principally related to the INET acquisition, as well as

 

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our continuing efforts to reduce operating expenses and improve the efficiency of our operations. The integration involves consolidating products, highly-complex technology, operations and administrative functions of two companies that previously operated separately. If we are unable to do this successfully, then we may not achieve the projected efficiencies, synergies and cost savings of the transaction. Key risks related to the integration include:

 

  •   Timing. The integration could take longer than planned and be subject to unanticipated difficulties and expenses. Any expenses could, particularly in the near term, offset or exceed the anticipated cost savings we expect to derive from the INET acquisition.

 

  •   Technology. We are planning to migrate our existing trading systems to INET’s platform. We may face unforeseen difficulties in achieving the migration, which could impose additional obstacles to completing the migration and could result in adverse consequences to our operations or could lead to us not achieving the synergies we anticipate.

 

  •   Management diversion. The demand placed on the time of our management team in managing the INET integration may adversely affect the operation of our existing businesses.

 

  •   Loss of business relationships. We may not be able to retain business relationships with suppliers and customers of INET. In particular, when we combine the books of The Nasdaq Market Center, Brut and INET, we may lose some of the business that we enjoyed when we operated the books separately.

 

  •   Personnel losses. We may lose key INET personnel, including technology personnel.

 

  •   Cultural changes. Employees in the acquired organization may be resistant to change and may not adapt well to our corporate culture.

 

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