The Nasdaq Stock Market (Nasdaq) has entered into a definitive agreement to acquire the Philadelphia Stock Exchange (PHLX). Nasdaq will pay $652 million in cash for the PHLX’s capital stock. The transaction, which was unanimously approved by the board of directors of both companies and is subject to other customary approvals, is expected to close in the first quarter of 2008 and become accretive to 2009 earnings.
“This strategic combination achieves our goal of diversifying our product and service offerings with attractive benefits to our trading clients while generating strong financial returns,” said Bob Greifeld, Nasdaq president and chief executive officer in a press statement. “Nasdaq has extensive experience in integrating technologies and businesses and we will be able to seamlessly integrate PHLX with the Nasdaq Stock Market.”
Sandy Frucher, PHLX chairman and chief executive, said that the deal represented “the best outcome for our customers, shareholders and the trading community as a whole.”
“We’re truly excited about our prospects for the future as part of the Nasdaq and look forward to having an active role in improving trading efficiency and stock exchange value,” Frucher said.
Nasdaq, which is launching a separate, electronic price/time options trading system in December, plans to preserve the PHLX’s market structure, and will continue to operate the electronic options trading platform alongside the options trading floor in Philadelphia. The PHLX’s operations will become part of Nasdaq’s Market Services business. Once the transaction closes, Nasdaq will become the third largest options market in the U.S. with 15% of market share.
