STOCKHOLM (Reuters) - U.S. electronic stock market Nasdaq (NDAQ.O) has agreed to buy Nordic markets owner OMX OMX.ST for $3.7 billion, as Nasdaq seeks to expand abroad following a series of rival stock market mergers.
The move, announced on Friday, comes after Nasdaq’s bid for the London Stock Exchange (LSE.L) was rejected in February and as rivals have pushed ahead with their own mergers.
“This combination provides our organizations with the ability to grow and accelerate the global flow of equity capital,” said Nasdaq’s chief executive, Robert Greifeld, who will be chief executive of Nasdaq OMX Group.
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.
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 percent 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 privatization plans in June.
OMX shares, suspended on Thursday, were up 12.22 percent at 202 crowns by 1120 GMT on Friday.
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 billion, 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 liberalization 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.
Already the New York Stock Exchange, the world’s largest share market, has merged with Paris-based Euronext as NYSE Euronext NYX.PA NYX.N, while Deutsche Boerse (DB1Gn.DE) is to buy New York-based International Securities Exchange.
Meanwhile the Chicago Mercantile Exchange Inc. CME.N and IntercontinentalExchange Inc. (ICE.N) are battling over CBOT Holdings Inc. BOT.N, owner of the Chicago Board of Trade.
OMX shareholder Investor AB (INVEb.ST), with 10.7 percent of the company, as well as Swedish bank Nordea NDA.ST have already accepted the Nasdaq offer, the companies said, and together with OMX’s chief executive, Magnus Bocker, this represents acceptances for 16.6 percent of OMX shares.
Bocker, to be deputy chief executive of the new company, declined to say whether OMX had talked with other buyers.
The London Stock Exchange has also been reported by media to be eyeing OMX, which made an abortive bid for the LSE in 2000.
“As you know, everyone in this industry knows everyone else pretty well,” Bocker told Reuters.
Greifeld was also tight-lipped. “Today is a day of Nasdaq and OMX. We are not talking about the LSE,” he told Reuters.
The companies expected total pretax annual synergies of $150 million, including $100 million of cost synergies and $50 million of revenue synergies.
Nasdaq shares rose 2.4 percent on Thursday, before being suspended, to $33.98, valuing the bid at about 211 crowns, according to a Reuters calculation using current exchange rates.
Nasdaq shareholders will own around 72 percent of the new company, the statement said, and the new group will have a combined market capitalization of around $7.1 billion.