Nasdaq, Inc. NDAQ has raised the offer price for the buyout of Oslo Børs VPS Holding ASA, which it intends to purchase through its indirect subsidiary, Nasdaq AB. The company has made an offer of 158 NOK per share in cash, up from 152 NOK offered earlier. Also, the company will pay an interest of 6% per annum on the new offer price, pro-rated per day from Jan 29, 2019 until the conditions to the offer are fulfilled or waived.
Additionally, Nasdaq has lowered the minimum acceptance condition to at least two-thirds of shareholders (or such higher percentage as may be necessary to comply with any applicable regulatory requirement) from more than 90%.
On Jan 30, the Zacks Rank #3 (Hold) securities exchange announced its plan to purchase Oslo Børs VPS. The acquisition will consolidate the Nordic financial markets. Nasdaq boasts an impressive history of successfully operating exchanges in the Nordic region.
Rationale of the Transaction
Nasdaq remains committed to consolidating the Nordic capital market by bringing the Norwegian financial ecosystem together with the Danish, Finish, Icelandic and Swedish systems. This transaction is thus a strategic fit.
Adena Friedman, president and CEO of Nasdaq stated that “combining Oslo Børs VPS’ exchange and securities depository expertise with our technology leadership and experience supporting the growth of small- and medium- sized enterprises and investors in the region, will not only help make the Norwegian markets stronger but the region in its entirety can become an even greater economic engine for long term growth.”
This transaction is expected to generate return in invested capital of at least 10% within 3-5 years, and be accretive to non-GAAP earnings per share within 12 months of closing. Also, this transaction will complement the company’s capital deployment strategy. Given operational excellence, Nasdaq expects to make organic business investments, increase dividends as income and cash flows grow, buy back shares and lower leverage to the mid 2x’s during the second half of 2020.
New-York-based Nasdaq is a leading provider of trading, clearing, exchange technology, listing, information and public company services across six continents.
Inorganic Growth Story
Nasdaq has grown meaningfully over the years through a number of strategic expansions. These acquisitions have helped the company gain direct access to the Canadian equities market, expand its technology offering, fortify its Corporate Solutions business and improve its market surveillance techniques. Its latest acquisitions include eVestment, Cinnober, Quandl among others, which have enhanced the company’s capabilities and are already accretive to its operational results.
Shares of Nasdaq have outperformed the industry since it first announced intention to buy Oslo Børs VPS on Jan 30. While the company’s shares have gained 2.4, the industry decreased 0.6%. The company’s sustained efforts to expand capabilities and accelerate growth should continue to keep the momentum alive.
Stocks to Consider
Some better-ranked stocks from the finance sector are Arch Capital Group Ltd. ACGL, Berkshire Hathaway Inc. BRK.B and Torchmark Corporation TMK.
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprise in all the last four reported quarters, with the average being 14.72%. The company has a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Berkshire Hathaway provides property and casualty insurance and reinsurance plus life, accident and health reinsurance besides operating railroad systems in North America. The company came up with positive surprise in three of the preceding four reported quarters, the average beat being 4.31%. The company is a Zacks #1 Ranked player.
Torchmark provides various life and health insurance products and annuities in the United States, Canada and New Zealand. The company pulled off positive surprise in three of the preceding four reported quarters, with the average beat being 2%. The company holds a Zacks Rank #2 (Buy).
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