With the takeover of NYSE Euronext poised to close, buyers seeking the next exchange purchase will find no cheaper target than Nasdaq OMX Group Inc.
For potential acquirers, Nasdaq OMX has the lowest price- earnings ratio among exchanges valued at more than $5 billion even after surging 33% in 2013, according to data compiled by Bloomberg. The New York-based operator of U.S. and European bourses recently made it easier for suitors by cutting the shareholder approval threshold for removing directors to a simple majority from a two-thirds vote.
“Anyone who has a good calculator and a checkbook ought to be looking,” C.T. Fitzpatrick, who oversees about $2.5 billion as chief investment officer of Vulcan Value Partners LLC in Birmingham, Alabama, said in a phone interview. “Particularly when you look at the multiples being paid for other exchanges, Nasdaq looks very attractive.”
The industry would benefit from more consolidation, even after IntercontinentalExchange Inc. buys NYSE Euronext, as firms wrestle with tougher securities regulations, according to Vulcan Value, a Nasdaq OMX shareholder that also said the company’s valuation makes it a potential target. Aite Group LLC said Nasdaq OMX has made itself more attractive to suitors by diversifying its business, even though it lags behind some peers in futures. Impediments to a deal could include opposition by politicians concerned about foreign ownership of a U.S. bourse.
Robert Madden, a spokesman for Nasdaq OMX, declined to comment when asked whether the company would be open to selling itself.
Nasdaq OMX, which has a market value of $5.5 billion, has struck its own deals over the years amid Chief Executive Officer Robert Greifeld’s strategy of diversifying the company.
In 2013, it agreed to purchase eSpeed, a platform for trading U.S. Treasuries, for $750 million in cash plus stock, and it spent $390 million to buy an investor-relations service from Thomson Reuters Corp. The company became a trans-Atlantic corporation by acquiring OMX AB in 2008.
“They are highly acquisitive,” Howard Chen, a New York- based analyst at Credit Suisse Group AG, said in a phone interview. “I don’t anticipate that will change.”
As exchanges seek to enter new markets and introduce different products to weather lower trading volume, many operators including Nasdaq OMX could be takeover targets, said Sang Lee, managing partner and co-founder of Boston-based Aite.
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