Nasdaq OMX Group Inc.
) culminated the acquisition of
BGC Partners Inc.
) electronic trading platform for benchmark U.S. Treasuries -
eSpeed. The deal was inked in Apr 2013 and valued at $1.23
Nasdaq had then agreed to pay BGC $750 million in cash, while
about $484 million was to be paid in stock. The shares will be
paid out by Nasdaq over a 15-year period with annual issuance of
about 1.0 million shares, depending on the performance of the
operation. Excluding transaction costs, the acquisition is
projected to deliver incremental earnings and lucrative returns
on capital within its first year.
Meanwhile, the eSpeed platform will be incorporated into
Nasdaq's Transaction Services business to enhance the OTC market
and to capitalize on the strong demand for diverse instruments.
On the other hand, the U.S. Treasury data products will be
integrated into the company's Global Information Services,
boosting its data product portfolio.
With annual revenue generation of about $100 million, eSpeed
trades in U.S. Treasury notes and bonds with a maturity profile
anywhere between 2 and 30 years. These highly liquid bonds are
primarily traded by the bank giants and have a daily turnover of
over $500 billion.
The acquisition of eSpeed not only adds to the company's
fixed-income portfolio but also diversifies its business profile,
thereby fortifying Nasdaq's market position within investment
services as well.
Nasdaq Expands in Istanbul
Yesterday, Nasdaq also announced a strategic alliance with the
bourse of Istanbul to offer its globally comparable,
superior-quality and complete market technology. This will likely
boost Istanbul's global presence as a stock exchange operator,
while enhancing Nasdaq's non-transaction based revenue
Over the past few quarters, revenues from equity and
derivative trading have been marred by declining volumes amid the
market volatility as well as unfavorable currency and interest
rate fluctuations. Hence, the decision to boost its technology
and data revenue across the globe should likely help Nasdaq
witness positive results in the future.
While Nasdaq and BGC carry a Zacks Rank #3 (Hold), rival
CME Group Inc.
) has a Zacks Rank #2 (Buy). Another outperformer of the stock
CBOE Holdings Inc.
) holds a Zacks Rank #1 (Strong Buy).
BGC PARTNRS INC (BGCP): Free Stock Analysis
CBOE HOLDINGS (CBOE): Free Stock Analysis
CME GROUP INC (CME): Free Stock Analysis
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
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