The Leading Innovators in the Exchange Industry to Create the World's Premier
Exchange and Technology Company
Combination Recommended by both OMX and NASDAQ Boards and Supported by Key OMX
and NASDAQ Shareholders
The boards of directors of The NASDAQ Stock Market, Inc. (“NASDAQ”) and OMX AB
(publ) (“OMX”) jointly announce that they have entered into an agreement (the
“Transaction Agreement”) to combine the two companies (the “Combination” or the
“Transaction”), creating the world's premier exchange and technology company.
The Combination will create the largest global network of exchanges and
exchange customers linked by technology. The Combination will provide
significant benefits for customers, shareholders and other stakeholders in both
companies.
The new group, to be called The NASDAQ OMX Group (the “Combined Group”), brings
together two companies with a common culture and vision of innovation,
competitiveness and pioneering technological expertise. NASDAQ OMX Group
combines two highly complementary businesses, uniting NASDAQ's leading global
brand, highly efficient electronic trading platform and track record of
customer focused innovation with OMX's global technology services platform and
customer base, efficient Nordic Exchange, derivatives capabilities and track
record of successful cross-border exchange integrations.
The Combination will be effected through a cash and stock tender offer (the
“Offer”) by NASDAQ for all outstanding shares in OMX. The consideration offered
is equivalent to 0.502 new NASDAQ shares plus SEK94.3 in cash for each OMX
share. Based on NASDAQ's closing price on 23 May, 2007, the Offer values OMX at
SEK208.1 per share , equivalent to SEK25.1 billion ($3.7 billion) and
represents a premium of 19 percent to the closing price of SEK174.5 per OMX
share on 23 May, 2007, the last full trading day prior to the announcement of
the Offer and a premium of 25 percent to the volume weighted average price of
SEK165.9 per OMX share over the 20 trading days up to and including 23 May,
2007.
Robert Greifeld, Chief Executive Officer of NASDAQ, commented:
“The future of exchanges is about technology, flexibility and scale. NASDAQ and
OMX together deliver all of these benefits. Our technology leadership and track
record in linking trading platforms means we will offer issuers and investors
unique benefits which were not available in one company until now. This
combination provides our organizations with the ability to grow and accelerate
the global flow of equity capital. At the same time, it provides us with an
excellent platform for further expansion into derivatives and other asset
classes. Our organizations bring together very complementary businesses, and we
see many new opportunities for growth in an era of unprecedented change and
development for exchanges.”
Magnus Böcker, Chief Executive Officer of OMX, commented:
“This combination creates a new leader in the exchange industry. By utilizing
the combined entities' joint expertise and competencies we will create an
outstanding platform for future growth. Issuers, members, information vendors
and investors on both NASDAQ and OMX Nordic Exchange will all benefit from its
new global context. The combination also provides benefits for OMX's global
technology customer base, as it enables an increased focus on research and
product development in the most important and fastest growing areas of the
exchange technology market.”
H. Furlong Baldwin, Chairman of NASDAQ, commented:
“We are each coming at this combination from a position of strength. At NASDAQ,
we are privileged to be partnering with such a reputable institution as the
OMX.”
Urban Bäckström, Chairman of OMX, commented:
“For OMX, as a company that has always been known for its innovative and
ground-breaking approach within the exchange industry, this is the natural next
step. This will also strengthen the Nordic region as a financial center.”
The Combined Group will have 2,349 employees in 22 countries with pro forma
revenues for the financial year 2006 of more than $1.2 billion (SEK8.3
billion). The relative values of the companies under the terms of the Offer and
based on NASDAQ's closing share price as of 23 May, 2007 are 58 percent NASDAQ
and 42 percent OMX. The pro forma market capitalization of The NASDAQ OMX Group
will be approximately $7.1 billion (SEK48.6 billion) , of which NASDAQ
shareholders will own approximately 72 percent and OMX shareholders will hold
approximately 28 percent as a result of the cash component of the Offer.
The Combined Group will be governed by representatives from both NASDAQ and OMX
under the leadership of Robert Greifeld, who will serve as Chief Executive
Officer and Magnus Böcker, who will serve as President. The board of directors
of the Combined Group will consist of 15 members, including nine
representatives from NASDAQ, five representatives from OMX and the Chief
Executive Officer of the Combined Group. The NASDAQ OMX share will be listed on
NASDAQ and on OMX Nordic Exchange.
The Combination is unanimously recommended by the boards of directors of each
of OMX and NASDAQ. Investor AB, Nordea Bank AB and Magnus Böcker, together
representing approximately 16.6 percent of OMX's current issued ordinary share
capital, have entered into irrevocable undertakings to accept the Offer and, if
a mix and match facility is included in the Offer, depending on the structure
and the terms of the facility, they will elect to receive all shares, subject
to proration. Olof Stenhammar & Company, representing approximately 1.6 percent
of OMX's current issued ordinary share capital, has expressed its support for
the Combination and its intention to become a long term shareholder in the
Combined Group. In addition, Hellman & Friedman, Silver Lake Partners, and
Robert Greifeld have each agreed to vote their shares in favor of certain
matters related to the Offer at the related NASDAQ shareholders' meeting,
subject to the terms of NASDAQ's certificate of incorporation.
The Combination will create:
• PREMIER GLOBAL EXCHANGE COMPANY: NASDAQ is the premier US equities exchange,
handling more shares and listing more companies than any other US exchange.
NASDAQ's open and innovative market platform is the first choice for issuers as
well as investors. OMX Nordic Exchange is a highly integrated, efficient
equities and derivatives market for leading European companies. Together, the
NASDAQ and OMX exchanges will process an average daily volume of 7.4 million
trades, representing a value of approximately $61 billion (SEK418 billion). The
NASDAQ and OMX exchanges will have approximately 4,000 companies listed from 39
countries with an aggregate market capitalization of approximately $5.5
trillion (SEK37.6 trillion);
• WORLD EXCHANGE TECHNOLOGY LEADER: OMX has been a pioneer in creating a truly
integrated cross-border stock market. OMX also has created a world-renowned
technology customer base of equity, debt, and derivatives exchanges with 60
clients in 50 countries worldwide, including Hong Kong, Singapore, Australia,
and the US. NASDAQ pioneered electronic trading, and has continued to innovate
over the last thirty years and now has the fastest, most efficient trading
platform in the US. Together, the Combined Group will provide the technology
for the world's increasingly competitive and demanding capital markets;
• INCREASED VISIBILITY AND ACCESS TO THE GLOBAL INVESTMENT MARKETPLACE FOR
ISSUERS: Issuers will be associated with an innovative, future-focused company
with blue-chip peers in all industry sectors. Listed companies will have access
to a broad base of investors and deep pools of liquidity;
• A HIGHLY COMPETITIVE DERIVATIVES MARKET OFFERING: OMX Nordic Exchange is
Europe's third largest marketplace for trading and clearing equity-related
derivatives. OMX's Nordic distribution network is extended through an
international network of links to cooperating exchanges and clearinghouses.
OMX's technology solutions are also being used by other leading derivatives
exchanges around the world and will be a key asset in the Combined Group's
opportunities to capture the high growth in derivatives trading globally;
• ENHANCED STRATEGIC OPPORTUNITIES: The Combined Group will be the partner of
choice for future cooperation and consolidation opportunities and have
increased financial and managerial resources. The combined entity will be well
positioned to drive organic growth and to continue to take a proactive role in
sector consolidation, in Europe, emerging markets, the Americas and Asia; and
• SIGNIFICANT SYNERGY POTENTIAL: Both parties believe the Combination will
create substantial value for shareholders, with total pre-tax annual synergies
estimated at $150 million (SEK1,025 million). Of this amount, $100 million
(SEK683 million) constitutes estimated cost synergies and $50 million (SEK342
million) estimated revenue synergies. Cost synergies will be realized through
the rationalization of IT systems and data centres, rationalization of non-IT
functions, and reduced capital and procurement expenditure. Revenue synergies
will be achieved through the creation of deeper liquidity pools, increased
cross-border trading, increased international listings, packaged data products
and enhanced technology sales.
The Combination is expected to create substantial value for shareholders and to
be accretive to earnings per share in 2009.
This summary should be read in conjunction with the text of the attached full
announcement.
A joint press and analyst conference regarding the Offer and Combination of
NASDAQ and OMX will be held today at 10.00am CET at OMX Headquarters,
Tullvaktsvägen 15, Stockholm. If you are unable to attend the meeting in
person, you can listen via:
Sweden: +46(0)850520270
UK: +44(0)2088179301
US: +1 7183541226
The presentation will also be webcast and can be found on www.omxgroup.com and
on www.nasdaq.com
In addition NASDAQ and OMX will host a second conference call for the benefit
of US based analysts and investors, to be held at 8.00am EDT:
Title: NASDAQ Conference Call
Domestic dial-in: 866-765-6327
International dial-in: +1 913-312-6621
And at 9.00am EDT, there will be a press call:
Title: NASDAQ Conference Call
Domestic dial-in: 800 810-0924
International Q&A: +1 913 981-4900
A presentation on the Combination will be available today on NASDAQ's
(www.nasdaq.com) and OMX's (www.omxgroup.com) websites.
For further information please contact:
OMX Contacts
Jonas Rodny, Senior Communications Manager
+46 8 405 72 67
jonas.rodny@omxgroup.com
Heidi Wendt, Vice President, Corporate Communications
+46 8 405 72 93
heidi.wendt@omxgroup.com
NASDAQ Contacts
Bethany Sherman, Senior Vice President, Corporate Communications
+1 212 401 8714
+1 917 836 1724
bethany.sherman@nasdaq.com
Vince Palmiere, Vice President, Investor Relations
+1 212-401-8742
vincent.palmiere@nasdaq.com
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this filing contains forward-looking statements, which
involve a number of risks and uncertainties. OMX and NASDAQ caution readers
that any forward-looking information is not a guarantee of future performance
and that actual results could differ materially from those contained in the
forward-looking information. Such forward-looking statements include, but are
not limited to, statements about the benefits of the Offer, the proposed
business combination transaction involving NASDAQ and OMX, including estimated
revenue and cost synergies, the Combined Group's plans, objectives,
expectations and intentions and other statements that are not historical facts.
Additional risks and factors are identified in NASDAQ's filings with the U.S.
Securities Exchange Commission (the “SEC”), including its Report on Form 10-K
for the fiscal year ending December 31, 2006 which is available on NASDAQ's
website at http://www.NASDAQ.com and the SEC's website at SEC's website at
www.sec.gov. and in OMX's filings with the Swedish Financial Supervisory
Authority (Sw. Finansinspektionen) (the "SFSA") including its annual report for
2006, which is available on OMX's website at http://www.omxgroup.com. The
parties undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
Notice to OMX shareholders
While the Offer is being made to all holders of OMX shares, this document does
not constitute an offer to purchase, sell or exchange or the solicitation of an
offer to purchase, sell or exchange any securities of OMX or an offer to
purchase, sell or exchange or the solicitation of an offer to purchase, sell or
exchange any securities of NASDAQ in any jurisdiction in which the making of
the Offer or the acceptance of any tender of shares therein would not be made
in compliance with the laws of such jurisdiction. In particular, the Offer is
not being made, directly or indirectly, in or into Australia, Canada, Japan or
South Africa. While NASDAQ reserves the right to make the Offer in or into the
United Kingdom or any other jurisdiction pursuant to applicable exceptions or
following appropriate filings and prospectus or equivalent document publication
by NASDAQ in such jurisdictions, pending such filings or publications and in
the absence of any such exception the Offer is not made in any such
jurisdiction.
Additional Information about this Transaction
In connection with the proposed business combination transaction, OMX and
NASDAQ expect that NASDAQ will file with the SEC a Registration Statement on
Form S-4 that will include a proxy statement of NASDAQ that also constitutes a
prospectus of NASDAQ. Investors and security holders are urged to read the
proxy statement/prospectus and any amendments and other applicable documents
regarding the proposed business combination transaction if and when they become
available because they will contain important information. You may obtain a
free copy of those documents (if and when available) and other related
documents filed by NASDAQ with the SEC at the SEC's website at www.sec.gov.
The proxy statement/prospectus (if and when it becomes available) and the other
documents may also be obtained for free by accessing NASDAQ's website at
http://www.nasdaq.com and OMX's website at http://www.omxgroup.com.
NASDAQ and its directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation of proxies
from NASDAQ stockholders in respect of the transactions described in this
communication. You can find information about NASDAQ's executive officers and
directors in NASDAQ's definitive proxy statement filed with the SEC on April
20, 2007. You can obtain free copies of these documents and of the proxy
statement prospectus (when it becomes available) from NASDAQ by accessing its
website at http://www.nasdaq.com. Additional information regarding the
interests of such potential participants will be included in the proxy
statement/prospectus and the other relevant documents filed with the SEC when
they become available.
Part II - Full Announcement
The boards of directors of The NASDAQ Stock Market, Inc. and OMX AB (publ)
hereby jointly announce that they have entered into a Transaction Agreement to
combine the two companies, creating the world's premier exchange and technology
company. The Combination will be effected through a cash and stock tender offer
by NASDAQ for all outstanding shares in OMX.
1. Background to and Reasons for the Offer and the Combination between NASDAQ
and OMX
The exchange industry is undergoing a period of unprecedented change. These
changes emanate from every aspect of our businesses, including an increasingly
competitive environment, significant opportunities stemming from regulatory
change, and the continued globalization of the investment industry. NASDAQ and
OMX each have the strategic vision to be at the forefront of these changes,
with a culture of innovation and flexibility, and the ambition to be an agile
and global force in the rapidly growing and developing exchange industry.
Each of NASDAQ and OMX is an innovator of electronic trading with technology as
the foundation of their businesses. The Combination brings together two
companies with a common culture and vision of innovation, competitiveness and
pioneering technological expertise. The NASDAQ OMX Group combines two highly
complementary businesses, uniting NASDAQ's leading global brand, highly
efficient electronic trading platform and track record of customer focused
innovation with OMX's global technology services platform and customer base,
efficient Nordic Exchange, multi-asset class capabilities and track record of
successful cross-border exchange integrations.
NASDAQ and OMX have been drivers of competition in the exchange industry.
NASDAQ has experienced 25 percent growth in matched trading volume across all
US equities in the past year as regulatory developments have resulted in an
increase in client demand for fast, efficient electronic trading. OMX has
experienced 38 percent average annual growth in trading volumes in its cash
markets business over the past three years, has substantially increased its
market share in globally listed shares such as Nokia and Ericsson, and is
providing technology platforms to new players in established markets. The
Combination will leverage NASDAQ's and OMX's experiences to capitalize on new
opportunities in the increasingly competitive exchange trading sector.
The Combined Group is expected to be the partner of choice for future
cooperation and consolidation opportunities with increased financial and
managerial resources. The Combined Group will be well positioned to drive
organic growth and to continue to take a proactive role in sector
consolidation, in Europe, emerging markets, the Americas and Asia.
OMX has been a pioneer in creating a truly integrated cross-border stock
market. OMX has also created a world-renowned technology customer base of
equities, debt, and derivatives exchanges with 60 clients in 50 countries
worldwide, including Hong Kong, Singapore, Australia, and the US. NASDAQ
pioneered electronic trading, and has continued to innovate over the last
thirty years and now has the fastest, most efficient trading platform in the
US. Together, we will provide the technology for the world's increasingly
competitive and demanding capital markets. In addition, each company has a
proven track record of participation in industry consolidation with successful
integration of exchanges and trading platforms resulting in strong revenue and
cost synergies.
This compelling Combination forms:
• The premier global exchange company:
Together, NASDAQ and OMX will have an average daily trading volume of 7.4
million trades, representing a value of approximately $61 billion (SEK418
billion). NASDAQ and OMX will have approximately 4,000 listed companies from 39
countries with an aggregate market capitalization of approximately $5.5
trillion (SEK37.6 trillion);
The Combined Group will have many of the world's largest companies listed on
its marketplaces, with a leading market share of listings in the technology,
software, telecommunication and pulp and paper industries worldwide. Issuers
will be associated with an innovative, future-focused company with blue-chip
peers in all industry sectors. Listed companies will have access to a broad
base of investors and deep pools of liquidity; and
The combined liquidity pools, advanced speed of execution and integrated
cross-border trading capabilities will provide issuers with increased
visibility and access to global equity capital.
• The world-leading provider of exchange technology:
OMX has been a pioneer in creating a truly integrated cross-border stock
market. OMX also has created a world-renowned technology customer base of
equity, debt and derivatives exchanges with 60 clients in 50 countries
worldwide, including Hong Kong, Singapore, Australia, and the US. NASDAQ
pioneered electronic trading, and has continued to innovate over the last
thirty years and now has the fastest, most efficient trading platform in the
US. Together, NASDAQ and OMX will provide the technology for the world's
increasingly competitive and demanding capital markets;
OMX's extensive experience and expertise in providing state-of-the-art
exchange technology worldwide to a sophisticated and global customer base,
matched with NASDAQ's technology excellence and global brand and advanced
services and support for innovative growth companies provides a powerful
opportunity to grow and enhance the combined technology business; and
NASDAQ and OMX believe their focus on technology leadership and the
combination of their expertise and brands will generate growth opportunities
and additional sales of technology and related services globally.
• A highly competitive derivatives market offering:
The OMX Nordic Exchange is Europe's third largest marketplace for trading and
clearing equity-related derivatives with an annual trading volume of
approximately 140 million equity related derivatives contracts. OMX's Nordic
distribution network is extended through an international network of links to
cooperating exchanges and clearinghouses; and
OMX's technology solutions are also being used by other leading derivatives
exchanges around the world and will be a key asset in the combined group's
opportunities to capture the high growth in derivatives trading globally.
• Enhanced data business with richer content and improved, global distribution:
The Combined Group will leverage the strength of each organization's
distribution capabilities to broaden the customer base for NASDAQ's and OMX's
existing data products and to provide enhanced data tailored with value-added
services to market participants;
Through NASDAQ's distribution network of over 250 data vendors and OMX's over
100 data vendors, the Combined Group will be able to enhance its global market
transparency; and
The market data generated by the Combined Group will lever its product
expertise and develop innovative data products and combined indices
incorporating global complementary NASDAQ and OMX stocks and derivatives.
• Enhanced strategic opportunities:
The Combined Group will be the partner of choice for future cooperation and
consolidation opportunities with increased financial and managerial resources.
The combined entity will be well positioned to drive organic growth and to
continue to take a proactive role in sector consolidation, in Europe, emerging
markets, the Americas and Asia; and
Both NASDAQ and OMX will benefit from increased geographic, product and
sectoral diversification and each will benefit from the other's strategic
holdings in the industry.
• Significant synergy potential:
Both parties believe the Combination will create substantial value for
shareholders, with total pre-tax annual synergies estimated at $150 million
(SEK1,025 million). Of this amount, $100 million (SEK683 million) constitutes
estimated cost synergies and $50 million (SEK342 million) estimated revenue
synergies;
Cost synergies will be realized through the rationalization of IT systems and
data centres, rationalization of non-IT functions, and reduced capital and
procurement expenditure; and
Revenue synergies will be achieved through the creation of deeper liquidity
pools, increased cross-border trading, increased international listings,
packaged data products and enhanced technology sales.
Total pre-tax restructuring and revenue investment costs are estimated at
$150 million (SEK1,025 million) which will be incurred in the two years
following completion of the Transaction.
Please see section 3 below for more information on synergies.
In summary, NASDAQ and OMX believe the Combined Group will create the world's
premier global exchange technology company.
2. Benefits to Customers and Other Stakeholders
Both NASDAQ and OMX support the view that capital markets growth and
development are promoted by transparent and efficient trading and technology
development. This is achieved through close cooperation and collaboration
between exchanges, issuers, members, investors and regulators. The efficiencies
resulting from the Combination will be reflected in greater liquidity, reduced
costs of trading, lower fees for members and investors and lower cost of
capital for issuers. NASDAQ and OMX each have a track record of reducing
operational costs while simultaneously improving customer service.
Investors and members will benefit from deeper pools of liquidity and higher
trading volumes, a common IT infrastructure and interface for both exchange
companies, access to more products and positive portfolio diversification.
Issuers will benefit from increased visibility and direct access to the largest
investor base in the world. Increased trading activity and liquidity is also
expected to reduce the cost of capital for issuers.
Technology customers will continue to benefit from the market insight the
Combined Group derives from its direct participation in capital markets.
Combined expertise will accelerate the development of the next generation of
exchange technology at a time when investors and members are increasingly
demanding multi-asset class trading platforms.
Data providers and vendors will receive richer content and improved global
distribution. The market data will allow NASDAQ OMX to leverage its product
expertise and develop a range of combined indices incorporating complementary
stocks and derivatives from existing indices.
The Combination also provides a unique opportunity for the Nordic markets by
placing them at the heart of the rapid consolidation of the exchange sector and
becoming a key component of a world-leading company in the exchange industry.
The OMX regulatory model will be unaffected by the Combination and the Combined
Group will be well-positioned as an attractive partner with the capacity to
compete effectively with other exchanges and continue consolidation across
Europe and globally.
3. Benefits to Shareholders
NASDAQ and OMX have significant experience in integrating exchanges
domestically and cross-border and delivering synergies. The Combination is
expected to create significant value for both companies' shareholders through
the realisation of pre-tax annual cost and revenue synergies of approximately
$150 million (SEK1,025 million) from 2010. Annual pre-tax cost synergies are
estimated at approximately $100 million (SEK683 million) in 2010. The
Combination is expected to be accretive to earnings per share in 2009.
Based on their successful integration track records, NASDAQ and OMX believe
that they will deliver the following cost synergies:
• IT synergies of $66 million (SEK451 million)
Integration of systems and platforms, merging the US operations of the two
companies, and leveraging the Genium platform
• Non-IT synergies of $34 million (SEK232 million)
Rationalization of overlapping functions, services, premises, and reduction
of capital and procurement expenditures
Both OMX and NASDAQ have established track records of delivering increased
revenues through their acquisitions of other exchanges and trading platforms
and valued-added service providers. Identified pre-tax annual revenue synergies
are expected to amount to $50 million (SEK342 million) achieved over three
years.
• Trading and Information Services
Increase in cross-border trading, cross-selling of data and new products and
facilitation of cross membership
• Issuer Services
Attract new domestic and international listings as a result of the Combined
Group's enhanced value proposition including brand, sector strengths and global
reach. Introduce NASDAQ's issuer products and services to OMX issuer customers
Non-recurring pre-tax costs to achieve these synergies are expected to be $150
million (SEK1,025 million), which would be incurred in the two years following
completion of the Transaction.
4. Company Structure and Branding
The Combined Group will be structured as a US holding company, named The NASDAQ
OMX Group Inc., the shares of which will be listed on NASDAQ and on OMX Nordic
Exchange.
The Combined Group's headquarters will be located in New York, which will also
be the centre of operations for the group's US cash trading business. The
Combined Group's technology business and Nordic trading business will continue
to be managed as today. The Combined Group will establish a new London presence
to capitalize on international growth opportunities.
The name and branding of the existing local exchanges within the Combined Group
will remain unchanged.
5. Governance and Management
The board of directors of the Combined Group will consist of 15 members,
including nine representatives from NASDAQ, five representatives from OMX and
the Chief Executive Officer of the Combined Group. The Chairman will be elected
by the board of directors of the Combined Group. The Deputy Chairman will be
designated by OMX.
It is proposed that Robert Greifeld, currently President and Chief Executive
Officer of NASDAQ, will serve as Chief Executive Officer of the Combined Group.
It is proposed that Magnus Böcker, currently President and Chief Executive
Officer of OMX, will become President of the Combined Group.
The Combined Group will have a balanced management team and organization
reflecting the experience, expertise and activities that each party brings to
the Combination.
6. Employees
OMX and NASDAQ each operate strong exchange companies which are recognized as
being among the best for employees in the market. Following the proposed
Transaction, the Combined Group's strategy will be to grow volume and broaden
its customer base, combining the strengths of both companies. In this context,
the proposed Transaction will create enhanced career opportunities for
employees of the Combined Group. All existing contracts will be honored.
Separately from the Offer, NASDAQ and OMX will offer participants of OMX's
existing stock option plans and share match plans fair treatment in respect of
their entitlements under the respective plans.
7. Regulatory Issues
The Combination of NASDAQ and OMX will require consent or approval from
relevant financial supervisory authorities and competition authorities.
Each of the Combined Group's markets will continue to be regulated in
accordance with local requirements. Specifically, OMX's markets will continue
to be regulated by their existing regulators, and the SEC will continue to
regulate NASDAQ's US markets only. The Sarbanes-Oxley Act will continue to be
exclusively applicable to companies registered in the US.
8. Dividend Policy
The dividend policy of the Combined Group will be determined by the board of
the Combined Group.
9. Financial Effects of the Offer
The Transaction is expected to create substantial shareholder value and be
accretive to earnings per share in 2009.
10. Financing of the Offer
Assuming full acceptance of the Offer, approximately 60.6 million new NASDAQ
shares will be issued pursuant to the Offer and the total cash consideration
amount payable by NASDAQ to OMX shareholders will be approximately $1.7 billion
(SEK11.4 billion).
The Offer will not be subject to any conditions concerning the availability of
financing. Bank of America and JPMorgan Chase Bank, N.A. (the “Banks”) have
agreed to finance the cash consideration of the Offer pursuant to a commitment
letter subject to all parties entering into definitive documentation. However,
if definitive documentation is not entered into by the date on which the Offer
is launched, the Banks will finance the cash consideration of the Offer by
means of an interim loan agreement (the “Interim Loan Agreement”) which
provides for committed funds and which is attached as an exhibit to the
commitment letter.
Drawdown pursuant to the Interim Loan Agreement is subject to the conditions of
the Offer being satisfied or waived (where such waiver requires consents from
the Banks in certain cases and under certain circumstances). The additional
conditions to drawdown under the Interim Loan Agreement, which NASDAQ and its
owners in practice control, are essentially that:
• NASDAQ and its current subsidiaries execute collateral agreements and
guarantees, deliver stock certificates and stock powers and make relevant
filings and recordations;
• NASDAQ issues a promissory note in favor of each Bank evidencing such
Bank's loans;
• NASDAQ delivers documents evidencing the authority and capacity to enter
into the Interim Loan Agreement and pertaining documentation, including legal
opinions and certificate of good standing; and
• NASDAQ is not in breach of certain limited key representations and events of
default under the Interim Loan Agreement (including that the documentation is
binding and that NASDAQ is not insolvent or lacks relevant authorizations).
11. Key Terms and Conditions of the Offer
11.1 The Offer
The Offer to the OMX shareholders consists of a mixture of cash and new NASDAQ
shares as consideration which values each OMX share at SEK208.1 based on the
assumptions set out in section 11.2 below. For every 100 OMX shares tendered,
each OMX shareholder will receive SEK9,430 in cash and 50.2 new NASDAQ shares,
equivalent to 0.502 NASDAQ shares and SEK94.3 in cash per OMX share.
NASDAQ is offering each OMX shareholder:
- In respect of approximately 45.3 percent of the number of OMX shares tendered
by such shareholder: SEK208.1 per OMX share in cash (the “Cash Consideration”);
and
- In respect of the remaining approximately 54.7 percent of the number of OMX
shares tendered by such shareholder: 0.918 new NASDAQ shares (the “Share
Consideration”), equivalent to a value of SEK208.1 per OMX share.
As an alternative, OMX shareholders with 200 or fewer OMX shares are entitled
to elect to receive a guaranteed Cash Consideration of SEK208.1 per OMX share.
NASDAQ reserves the right to introduce a mix and match facility which will
enable OMX shareholders to elect to tender a higher proportion of their OMX
shares in return for the Cash Consideration or to tender a higher proportion of
their OMX shares in exchange for the Share Consideration, subject to matching
elections by other OMX shareholders. The total number of new NASDAQ shares to
be issued under the Offer would not be varied as a result of elections made
under such mix and match facility. If NASDAQ introduces a mix and match
facility, the details of such facility will be presented in the offer document.
No commission will be charged in respect of settlement of the Offer.
NASDAQ does not own any shares or other financial instruments in OMX.
11.2 Offer Value and Premium
Based on a closing price for NASDAQ shares of $33.19 on NASDAQ on 23 May, 2007
and a SEK/$ exchange rate of 6.83, the Offer value and Offer premium are the
following:
• The Offer values each OMX share at approximately SEK208.1;
• The Offer values the whole of the issued share capital of OMX at
approximately SEK25.1 billion ($3.7 billion);
• The Offer represents:
A premium of 19 percent relative to SEK174.5, the closing price on 23 May,
2007, the last full trading day prior to the announcement of the Offer and a
SEK/$ exchange rate of 6.83 on 23 May, 2007; and
A premium of 25 percent to the volume weighted average price of SEK165.9 per
OMX share over the 20 trading days up to and including 23 May, 2007, the last
full trading day prior to the announcement of the Offer.
Assuming full acceptance of the Offer, a maximum amount of approximately
SEK11.4 billion ($1.7 billion) in cash is payable and a maximum number of
approximately 60.6 million new NASDAQ shares will be issued under the Offer.
11.3 Fractional Entitlements
Fractions of the new NASDAQ shares will not be issued to accepting OMX
shareholders. Such fractions will be sold in the market and the net proceeds
will be distributed proportionally between the OMX shareholders concerned.
11.4 Completion Conditions of the Offer
Completion of the Offer is conditional upon:
1. That the Offer is accepted to such an extent that NASDAQ becomes the owner
of shares representing more than 90 percent of the outstanding shares of OMX on
a fully diluted basis;
2. That NASDAQ's shareholders approve the issuance of the new NASDAQ shares in
connection with the Offer by the required vote under the applicable laws and
NASDAQ exchange rules;
3. That the new NASDAQ shares to be issued under the Offer are approved for
listing on the NASDAQ National Market;
4. That the recommendation by the board of directors of OMX that OMX
shareholders accept the Offer has not been withdrawn;
5. That NASDAQ's Registration Statement on Form S-4 in the United States, which
will register the new NASDAQ shares, has become effective under the Securities
Act of 1933, as amended, and is not the subject of any stop order or proceeding
seeking a stop order by the Securities and Exchange Commission;
6. That all necessary approvals from public authorities or other regulatory
bodies, including competition authorities and financial supervisory
authorities, in connection with the Offer, its implementation or the
acquisition of OMX by NASDAQ, have been obtained on terms reasonably acceptable
to NASDAQ, or applicable deadlines or waiting periods in relation thereto have
expired or been terminated, and there being no notice of any intention to
revoke, suspend, restrict, impose any conditions in relation to, vary, amend or
not renew any authorizations, certificates, licenses, permissions or approvals
of OMX or any of its subsidiaries;
7. That neither the Offer, its implementation nor the acquisition of all
outstanding shares in OMX, has been rendered partially or wholly impossible or
significantly impeded as a result of legislation, regulation, any decision of
court, public authority or other regulatory body, or as a result of other
comparable measures beyond NASDAQ's control in Sweden, the United States or
elsewhere;
8. That no material adverse change in OMX's financial position or operations
has occurred after the announcement of the Offer; such material adverse change
that materially adversely affects, or could reasonably be anticipated to have
such effect on, OMX's liquidity, sales, results or equity and which could not
have been reasonably known or anticipated by NASDAQ at the time of the
announcement of the Offer; provided, however, that the following shall not be
considered in determining whether such a material adverse change has occurred:
(A) any change or development in economic, business, political or securities
markets conditions generally (including any such change or development
resulting from acts of war, terrorism or natural disasters), except that any
change or development that, relative to other participants in OMX's industry,
disproportionately impacts the liquidity, sales, results or equity of OMX shall
be so considered in determining whether a material adverse change has occurred,
(B) any change or development to the extent resulting from the execution or
announcement of the Offer or the transactions contemplated thereby, or (C) any
changes in laws, rules or regulations.
9. That no information made public by OMX or disclosed by OMX to NASDAQ is
materially inaccurate, incomplete or misleading, and that OMX has not failed to
make public any material information which should have been made public by it.
NASDAQ reserves the right to withdraw the Offer in the event that it is clear
that any of the above conditions is not fulfilled or cannot be fulfilled.
However, the Offer may only be withdrawn with reference to the non-fulfillment
of the conditions 3-9 above if the non-fulfillment is of material importance
for NASDAQ's acquisition of the Shares in OMX.
NASDAQ reserves the right to waive, in whole or in part, one, several or all of
the conditions set out above, including with respect to condition 1 above, to
complete the Offer at a lower level of acceptance; provided, however, that any
waiver of conditions 1, 3 or 6 shall require the prior written consent of OMX
(such consent not to be unreasonably withheld or delayed), except that no
waiver of condition 1 shall require such prior written consent of OMX if, when
the condition is waived, the Offer is accepted to such an extent that NASDAQ
becomes the owner of shares representing at least 67 percent of the outstanding
shares of OMX on a fully diluted basis.
11.5 Transaction Agreement between NASDAQ and OMX
NASDAQ and OMX have entered into a Transaction Agreement in connection with the
Offer. The Transaction Agreement contains, inter alia, provisions on
cooperation in regard of the offer document, the registration statement and
filings with the relevant authorities, provisions on corporate governance and
organizational issues post closing of the Transaction and provisions on
treatment of OMX employees' option and share match plans. The Transaction
Agreement also contains customary provisions on board recommendations, so
called non-solicitation and related provisions. The full Transaction Agreement
will be available in the offer document.
11.6 Irrevocable Undertakings from OMX Shareholders
Investor AB, Nordea Bank AB and Magnus Böcker, together representing
approximately 16.6 percent of OMX's current issued ordinary share capital, have
entered into irrevocable undertakings to accept the Offer and, if a mix and
match election facility is included in the Offer, depending on the structure
and the terms of the facility, they will elect to receive all shares, subject
to proration. The irrevocable undertakings will or could lapse in certain
circumstances including:
• a third party offer being made for the OMX shares which corresponds to an
Offer value in SEK equal to or exceeding SEK220 per OMX Share;
• the value of the Offer in SEK falls below SEK190 following the date of this
announcement;
• if the Registration Statement on Form S-4 in relation to the Offer is not
completed and submitted to the Securities and Exchange Commission on or before
15 August, 2007;
• if NASDAQ would waive the acceptance level condition and declare the Offer
unconditional without the consent from the shareholder making the undertaking,
and at the time of such waiver NASDAQ has not reached an acceptance level of
2/3 of the OMX shares (including shares subject to irrevocable undertakings,
whether yet delivered for acceptance or not);
• if the recommendation of the Offer by the board of OMX is withdrawn;
• if the Offer has not been declared unconditional before 15 December, 2007; or
• if a material adverse change in NASDAQ's financial position or operation that
could have a material adverse effect on NASDAQ's financial position, liquidity,
sales, results, equity, or stock price becomes known to the shareholder making
the undertaking.
11.7 Approval from NASDAQ Shareholders
Hellman & Friedman, Silver Lake Partners, and Robert Greifeld have each agreed
to vote their shares in favor of certain matters related to the Offer at the
related NASDAQ shareholders' meeting, subject to the terms of NASDAQ's
certificate of incorporation.
11.8 Board Recommendations
The board of directors of OMX unanimously recommends to OMX shareholders to
accept the Offer. The board of directors of OMX has received fairness opinions
from Morgan Stanley & Co. Limited (“Morgan Stanley”) and Credit Suisse,
concluding that, in their opinion and subject to the qualifications and
assumptions set out therein, the Offer consideration is fair from a financial
point of view to the shareholders of OMX. The full opinion of the board and the
fairness opinions will be included in the offer document.
The board of directors of NASDAQ consider the terms of the Offer to be in the
best interests of NASDAQ and the NASDAQ shareholders as a whole, and
unanimously recommends that the NASDAQ shareholders vote in favor of the
resolutions to be proposed at the shareholders' meeting of NASDAQ to be held in
connection with the Offer.
11.9 Due Diligence
After approval by the board of directors of OMX, NASDAQ has conducted a limited
due diligence review of certain business, financial and legal information
relating to OMX.
OMX has conducted a limited due diligence review of certain business, financial
and legal information relating to NASDAQ.
11.10 Governing Law
The Offer shall be governed by and construed in accordance with the laws of
Sweden. The Takeover Rules issued by the Stockholm Stock Exchange and the
Swedish Securities Council's rulings regarding interpretation and application
of the Takeover Rules (including its rulings with respect to the Rules on
Public Offers for the Acquisition of Shares issued by the Swedish Industry and
Commerce Stock Exchange Committee) apply in relation to the Offer. Furthermore,
in accordance with the Swedish Takeover Act, NASDAQ has contractually agreed
with the Stockholm Stock Exchange to comply with the foregoing and to submit to
any sanctions imposed by the Stockholm Stock Exchange upon breach of the
Takeover Rules. The courts of Sweden shall have exclusive jurisdiction over any
dispute arising out of or in connection with the Offer and the City Court of
Stockholm shall be the court of first instance.
12. Listing of and Trading in the NASDAQ OMX share
The NASDAQ OMX share will be listed on NASDAQ and on the OMX Nordic Exchange.
Further details on listing, admission to trading and dealings in the NASDAQ
share will be included in the offer document.
13. Compulsory Acquisition and Delisting
In the event that NASDAQ (whether in connection with the Offer or otherwise)
obtains more than 90 percent of OMX's issued share capital on a fully diluted
basis, NASDAQ intends to commence a compulsory acquisition procedure under the
Swedish Companies Act to acquire all remaining OMX shares. In connection
therewith, NASDAQ intends to promote a de-listing of the OMX share from the
Stockholm Stock Exchange and the marketplaces where there is a secondary
listing of the OMX share.
14. Indicative Timetable
An offer document regarding the Offer and a retail shareholder information
brochure will be published. These documents are expected to be published during
the third quarter of 2007.
The acceptance period will commence promptly following the publishing of the
offer document, and will last for no less than 20 business days. NASDAQ
reserves the right to extend the acceptance period and to defer the date for
settlement subject to applicable law and the Transaction Agreement.
The completion of the Offer is conditional upon the satisfaction of certain
conditions as set out in section 11.4 above, including expiration of the
Hart-Scott-Rodino waiting period and receipt of anti-trust and full regulatory
approvals and NASDAQ shareholder approval. NASDAQ and OMX expects the Offer is
to be completed by year-end 2007. Further details regarding the publication of
these documents and the timetable for the Offer period will follow in a
separate press release in due course.
15. Advisors
JPMorgan is acting as exclusive financial advisor to NASDAQ in relation to the
transaction and will not be responsible for providing the protections afforded
to their client to any other person. Advokatfirman Cederquist and Skadden,
Arps, Slate, Meagher & Flom LLP are serving as legal advisors to NASDAQ in
relation to the Transaction. Morgan Stanley, Lenner & Partners and Credit
Suisse are acting as financial advisors to OMX in relation to the transaction
and will not be responsible for providing the protections afforded to their
client to any other person. Advokatfirman Vinge and Cleary Gottlieb Steen &
Hamilton LLP are serving as legal advisors to OMX in relation to the
Transaction.
16. Information on OMX
OMX is a leading expert in the exchange industry. Through the Nordic Exchange,
OMX offers access to approximately 80 percent of the Nordic and Baltic
securities market. The Nordic Exchange is a term used for marketing purposes
and is not a legal entity. It describes the common offering from the Helsinki
Stock Exchange, Copenhagen Stock Exchange, Stockholm Stock Exchange, Iceland
Stock Exchange, Tallinn Stock Exchange, Riga Stock Exchange and Vilnius Stock
Exchange. OMX integrated technology solutions cross the transaction chain
enabling efficient securities transactions for over 60 exchange organizations
in more than 50 countries. OMX is a Nordic Large Cap company in the Financials
sector on the OMX Nordic Exchange.
OMX key statistics as of Q1, 2007:
• 801 Listed Companies
• Domestic market capitalization: $1.2 trillion
• Total market capitalization: $1.3 trillion
• Average daily trades cash market: 0.2 million
• Average daily number of derivatives contracts: 0.7 million
• Average daily value traded: $7 billion
• 67,200 information terminals for professionals
• 27,800 information terminals for non-professionals
• Technology contracts: 60+
17. Information on NASDAQ
NASDAQ is the largest US electronic stock market. With approximately 3,200
companies, it lists more companies and, on average, trades more shares per day
than any other US market. It is home to companies that are leaders across all
areas of business including technology, retail, communications, financial
services, transportation, media and biotechnology. NASDAQ is the primary market
for trading NASDAQ-listed stocks.
NASDAQ key statistics as of Q1, 2007:
• 3,181 Listed Companies
• IPOs: 37 / $6.3 billion of raised value
• Domestic market capitalization: $3.9 trillion
• Total market capitalization: $4.2 trillion
• Average daily trades: 7.2 million
• Average daily value traded: $54 billion
• 400,000 information terminals for professionals
• 1.7 million information terminals for non-professionals
• Technology contracts: 1
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this filing contains forward-looking statements, which
involve a number of risks and uncertainties. OMX and NASDAQ caution readers
that any forward-looking information is not a guarantee of future performance
and that actual results could differ materially from those contained in the
forward-looking information. Such forward-looking statements include, but are
not limited to, statements about the benefits of the Offer, the proposed
business combination transaction involving NASDAQ and OMX, including estimated
revenue and cost synergies, the Combined Group's plans, objectives,
expectations and intentions and other statements that are not historical facts.
Additional risks and factors are identified in NASDAQ's filings with the U.S.
Securities Exchange Commission (the “SEC”), including its Report on Form 10-K
for the fiscal year ending December 31, 2006 which is available on NASDAQ's
website at http://www.NASDAQ.com and the SEC's website at SEC's website at
www.sec.gov. and in OMX's filings with the Swedish Financial Supervisory
Authority (Sw. Finansinspektionen) (the "SFSA") including its annual report for
2006, which is available on OMX's website at http://www.omxgroup.com. The
parties undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
Notice to OMX shareholders
While the Offer is being made to all holders of OMX shares, this document does
not constitute an offer to purchase, sell or exchange or the solicitation of an
offer to purchase, sell or exchange any securities of OMX or an offer to
purchase, sell or exchange or the solicitation of an offer to purchase, sell or
exchange any securities of NASDAQ in any jurisdiction in which the making of
the Offer or the acceptance of any tender of shares therein would not be made
in compliance with the laws of such jurisdiction. In particular, the Offer is
not being made, directly or indirectly, in or into Australia, Canada, Japan or
South Africa. While NASDAQ reserves the right to make the Offer in or into the
United Kingdom or any other jurisdiction pursuant to applicable exceptions or
following appropriate filings and prospectus or equivalent document publication
by NASDAQ in such jurisdictions, pending such filings or publications and in
the absence of any such exception the Offer is not made in any such
jurisdiction.
Additional Information About this Transaction
In connection with the proposed business combination transaction, OMX and
NASDAQ expect that NASDAQ will file with the SEC a Registration Statement on
Form S-4 that will include a proxy statement of NASDAQ that also constitutes a
prospectus of NASDAQ. Investors and security holders are urged to read the
proxy statement/prospectus and any amendments and other applicable documents
regarding the proposed business combination transaction if and when they become
available because they will contain important information. You may obtain a
free copy of those documents (if and when available) and other related
documents filed by NASDAQ with the SEC at the SEC's website at www.sec.gov.
The proxy statement/prospectus (if and when it becomes available) and the other
documents may also be obtained for free by accessing NASDAQ's website at
http://www.nasdaq.com and OMX's website at http://www.omxgroup.com.
NASDAQ and its directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation of proxies
from NASDAQ stockholders in respect of the transactions described in this
communication. You can find information about NASDAQ's executive officers and
directors in NASDAQ's definitive proxy statement filed with the SEC on April
20, 2007. You can obtain free copies of these documents and of the proxy
statement prospectus (when it becomes available) from NASDAQ by accessing
NASDAQ's website. Additional information regarding the interests of such
potential participants will be included in the proxy statement/prospectus and
the other relevant documents filed with the SEC when they become available.
# # #
