In a bid to establish a global e-trading network, the Nasdaq Stock Market announced Tuesday that it had agreed to acquire a majority stake in the Easdaq, a Belgium-based pan-European electronic stock market.
Nasdaq plans to restructure Easdaq into a globally linked, pan-European market called Nasdaq Europe and said that it viewed this transaction as “its first step in playing a major role in the further consolidation of trading in Europe.”
Said Nasdaq chairman Frank G. Zarb: “Today’s announcement moves us closer to achieving our strategic vision of an international Nasdaq. This transaction begins to put into place the third leg of our global trading platform — Nasdaq Europe, Nasdaq U.S., and Nasdaq Japan.”
Inside the Deal
Terms of the deal were not disclosed, but published reports indicate that the total cost of the deal — including the construction of a new trading platform and other investments — to be approximately US$62 million.
Initially, Nasdaq will acquire approximately 58 percent of the company on a fully diluted basis. That percentage will drop to 51 percent after the exercise of warrants outstanding and the issuance of additional shares.
Knight Trading Group will remain a strategic shareholder in Nasdaq Europe and eight major securities firms have indicated they will join Nasdaq in the investment, Nasdaq said.
The Nasdaq Europe exchange will be under the supervision of the Belgian Market Authority, the Belgian Banking and Finance Commission, and the Belgian Minister of Finance. Although stockholder approval is required before the deal can be finalized, Easdaq has already rebranded its Web site Nasdaq Europe.
With the addition of Nasdaq Europe, Nasdaq is looking to capture a significant portion of the fractured European market, especially cross-border trading, and to expand and consolidate the European order flow of U.S.-based stocks. By offering investors access to U.S., European, and Asian securities, Nasdaq would also like to become the European initial public offering (IPO) market of choice.
Nasdaq Europe expects to launch a newly developed European Trading System (ETS) in May or June of this year that will offer similar functionality to the current U.S. Nasdaq. The ETS will be adapted to the needs and requirements of the European market and include an electronic broker-to-broker negotiation facility.
“This transaction represents the culmination of many years of effort to create a pan-European stock market for growth companies which will be part of a global trading platform,” Easdaq chairman Stanislas Yassukovich.
Although Nasdaq has high hopes for Nasdaq Europe, it said that it would continue discussions with “other markets and other major participants.”
Modeled after Nasdaq, Easdaq launched in 1996 with the goal of acquiring 500 listed companies within a year. However, by the end of February 2001, only 62 companies had listed their stocks with the exchange.
By comparison, Nasdaq, which was launched in 1971, currently lists over 4,500 companies, many of them high-tech firms.
Nasdaq’s roster includes such recognizable dot-coms as Amazon, Priceline, Yahoo! and eBay.