Nasdaq OMX
(
NDAQ
) has announced that it will acquire Thomson Reuters' investor
relations, public relations and multimedia solutions businesses.
The deal is expected to complete in the first half of 2013 and will
involve a transaction of $390 million in cash. The acquisition is a
part of Nasdaq's effort to diversify operations beyond the
traditional trading services that it provides.
Moves like these are particularly important given the tepid
trading volumes that Nasdaq has experienced this year. The U.S.
matched equity volume and European equity volume for November were
down 25% from the same period in 2011. Our price estimate of
$29 on Nasdaq OMX's stock
is at a premium of 20% to the current market price.
See our full analysis for
Nasdaq OMX
|
NYSE Euronext
|
CME Group
Mitigating The Effects Of Uncertain Conditions
A third of Nasdaq's $3.5 billion revenues are derived from
non-transaction based streams like market data and access services,
as these divisions do not involve transaction based expenses like
rebates, brokerage, clearance and exchange fees, and the margins
are much higher than the trading divisions. (Close to 50% compared
to 25%)
Market data is the most important division for Nasdaq,
accounting for a fifth of the total EBITDA, while U.S. derivatives
trading and U.S. listing services account for 15%. Access services
and market technology are the other two important divisions with
13% and 11% of the total EBITDA.
The three divisions that Nasdaq is acquiring from Thomson
Reuters generated $233 million in revenues in the 12 months ending
September. This is about 7% of Nasdaq's revenues in 2011. In the
first nine months of 2012, the exchange reported a 13% increase in
the U.S. market data revenues, helped by the acquisition of
RapidData at the end 2011. With shrewd acquisitions like this and
the changing landscape in which a capricious market and evolving
technology will lead to increased demand for market data. We expect
a steady increase in Nasdaq's non-transaction revenues.
Submit a Post at Trefis Powered by Data and Interactive
Charts
|
Understand What Drives a Stock at Trefis
A third of Nasdaq's $3.5 billion revenues are derived from
non-transaction based streams like Market Data and Access
Services. As these divisions do not involve transaction based
expenses like rebates, brokerage, clearance and exchange fees,
the margins are much higher than trading divisions. (Close to 50%
compared to 25%)