The acquisition will help Nasdaq solidify its mission of becoming a technology provider that also runs exchanges.
Nasdaq, known for its exchanges, will be securing its goal of becoming mostly a solutions provider with its just announced definitive $10.5 billion agreement to acquire Adenza — which is a combination of Calypso and AxiomSL — from private equity firm Thoma Bravo.
Once authorities approve the $10.5 billion price tag, which consists of cash and shares of common stock, more than three-quarters of Nasdaq’s revenues will emanate from its solutions business, officials say. Now, 71 percent of Nasdaq’s revenues stem from solutions.
In 2022, nearly half of Nasdaq’s revenues, or 47 percent, came from capital access platforms, while 44 percent came from market platforms, and nine percent from anti-financial crime solutions, officials say.
However, after the acquisition, Nasdaq is projecting that 41 percent of its revenues will come from capital access platforms, 36 percent from financial technology, including Adenza, and 23 percent from market services. Overall, 77 percent of its income will come from its solutions business.
“Nasdaq is acquiring Adenza for $10.5 billion, comprised of $5.75 billion in cash and 85.6 million shares of Nasdaq common stock, based on the volume-weighted average price per share over 15 consecutive trading days prior to signing,” according to Nasdaq officials. “Nasdaq has obtained fully committed bridge financing for the cash portion of the consideration and plans to issue approximately $5.9 billion of debt between signing and closing and use the proceeds to replace the bridge commitment.”
The transaction helps Nasdaq “serve an expanded client base with holistic, multi-asset-class, and cloud-enabled risk and regulatory management solutions. … Adenza brings additional relationships across the European banking system to Nasdaq’s strong presence in North America and the Asia Pacific region,” officials say.
Adenza’s wares will be added to Nasdaq’s mission-critical solutions, including Nasdaq’s Marketplace Technology and Anti-Financial Crime products, officials say.
Holden Spaht
“Upon the closing of the transaction, Holden Spaht, a managing partner at Thoma Bravo, is expected to be appointed to Nasdaq’s board of directors, which will be expanded to twelve members,” according to the official announcement.
With Adenza, Nasdaq intends to provide “comprehensive support to financial institutions, establishing a multi-asset class, full trade lifecycle platform” with regulatory technology solutions, officials say.
Specifically, Nasdaq will get Calypso’s systems for: front office treasury; cash management; risk management; middle office and risk; collateral management; and post-trade processing.
From the AxiomSL half of Adenza, Nasdaq will acquire regulatory reporting; capital management; liquidity risk management; global shareholder disclosures; trade and transaction reporting; and ESG reporting.
“This is an exceptional opportunity to acquire a leading software company that enhances Nasdaq’s position at the heart of the global financial system,” says Adena Friedman, chair and CEO at Nasdaq, in a prepared statement.
“The addition of Adenza accelerates our ambition to modernize and advance the world’s economies,” Friedman says. “It also introduces a fast-growing $10 billion serviceable addressable market to Nasdaq.”
“Since the implementation of Dodd-Frank in 2010, banks have increased their compliance costs by more than $50 billion per year,” says Tal Cohen, president of Market Platforms, Nasdaq, in a prepared statement.
In a presentation with analysts, Cohen adds: “We can offer Adenza’s collateral management and over-the-counter post-trade capabilities as a complement to our existing post-trade offerings.”
The acquisition is a validation of Thoma Bravo’s vision creating a unique software franchise from Calypso and AxiomSL “that could help financial institutions across the globe manage their most complex trading, risk, and regulatory reporting requirements,” Spaht says in a statement.
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are serving as financial advisors to Nasdaq, with Goldman Sachs & Co. LLC serving as lead advisor, officials say. Bridge financing for the transaction has been provided by Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A.
Adena Friedman
Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Nasdaq while Qatalyst Partners LP is serving as lead financial advisor to Thoma Bravo and Adenza, along with Barclays, Citi, Evercore, HSBC Securities (USA) Inc., Jefferies LLC, and Piper Sandler.
Kirkland & Ellis LLP is serving as legal advisor to Thoma Bravo and Adenza, officials say.
More about the acquisition is available here: https://bit.ly/3P7np2R
“Nasdaq owns and operates nine U.S. equities markets, including the largest single liquidity pool for U.S. equities by market share. We offer several different market models in the U.S. Our exchanges include our flagship exchange, The Nasdaq Stock Market, Nasdaq BX and Nasdaq PSX,” according to the Nasdaq website.
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