Stock exchange operator Nasdaq OMX Group said Monday that it has reached an agreement to buy the eSpeed electronic trading platform from BGC Partners in a deal worth as much as $1.23 billion.
If completed, the acquisition would allow New York–based Nasdaq to enter the electronic fixed-income business through an eSpeed database that trades in U.S. Treasuries—a market with more than $500 billion in daily transactions, according to the Nasdaq statement announcing the deal. Nasdaq CEO Bob Greifeld said in the statement that the eSpeed acquisition fits with his company’s plans to diversify its operations and deliver "significant value" to shareholders.
The deal’s terms call for Nasdaq to pay New York–based financial brokerage firm BGC $750 million in cash, along with contingent issuances of Nasdaq stock over the next 15 years that BGC says could be worth up to $484 million. The deal is expected to close by midyear, pending regulatory approval.
Nasdaq’s move to acquire eSpeed comes some two years after the exchange teamed up with IntercontinentalExchange (ICE) on a $11.3 billion bid for New York Stock Exchange parent NYSE Euronext. Nasdaq and ICE ultimately abandoned the offer in the face of Justice Department objections. (Last year—after European antitrust regulators subsequently squashed a $10 billion all-stock deal that would have seen NYSE Euronext sold to Germany’s Deutsche Börse— ICE made an $8.2 billion cash-and-stock deal for NYSE Euronext that is currently being reviewed by the European Commission.)
Nasdaq is being advised on the eSpeed deal by a New York–based Skadden, Arps, Slate, Meagher & Flom team that includes M&A partners Stephen Arcano and Jeffrey Brill. Tax partner Stuart Finkelstein and bank finance partner Sarah Ward are also advising, along with corporate finance partners Yossi Vebman and Phyllis Korff.
Skadden advised Nasdaq in 2007 in connection with its purchase of Nordic stock exchange OMX from Borse Dubai for $3.7 billion. The firm also advised Nasdaq on its attempt earlier that year to take over the stake in the London Stock Exchange it didn’t already own. When that deal collapsed, Nasdaq tapped Skadden when it sold the 28 percent LSE stake it did own to Borse Dubai for $1.6 billion.
Former Akin, Gump, Strauss, Hauer & Feld partner Edward Knight serves as Nasdaq’s general counsel.
Wachtell, Lipton, Rosen & Katz corporate partner David Lam is leading a team from that firm advising BGC on the sale of eSpeed. The American Lawyer recently named Lam a "Dealmaker of the Year" for his work on last year’s spin-off of the Abbott Laboratories unit AbbVie. Lam also advised Cantor Fitzgerald, in 2007, when the securities firm created a new public company by combining two of its trading units—eSpeed and BGC—in a $1.3 billion deal.
Antitrust partner David Schwartz, executive compensation and benefits partner Jeremy Goldstein, and tax partner Joshua Holmes are also on the matter for Wachtell. The Wachtell associates working on the deal are Sebastian Fain, Francis Stapleton IV, Franco Castelli, and Michael Sabbah.
Stephen Merkel serves as BGC’s general counsel.