Nasdaq Acquires Adenza for $10.5 Billion in Their Biggest Takeover
Nasdaq announced on Monday, May 24 that it would acquire Adenza, a financial risk software company, for $10.5 billion in its biggest takeover ever. Stock traders across the world are looking for more stable revenue streams like data and risk management, which is why Nasdaq acquired Adenza, as competitors like the London Stock Exchange Group and the Intercontinental Exchange have tried to do by buying out focused businesses on data and software. Nasdaq’s cash and stock acquisition is expected to “significantly” improve its offerings in regulatory technology, compliance, and risk management.
Adenza’s software is used by large banks to manage post-crisis regulations, which is expected to improve Nasdaq’s solutions business, accounting for over 70% of its revenues. Adenza, which is owned by private equity firm Thoma Bravo, is expected to generate $590 million in revenue and $300 million in free cash flow this year.
Thoma Bravo will receive $5.75 billion in Nasdaq cash and an approximately 15% equity stake in the company, valued at nearly $5 billion at current prices. The US-based investment group built Adenza by buying software company Calypso in 2021 for $3.7 billion and combining it with AxiomSL, a compliance software company it acquired in 2020 for a reported price of around $2 billion. Thoma Bravo is a buyout group that specializes in software deals and manages $127 billion in assets.
Trading groups are becoming more comfortable using their stock to fund their growth, as they look for more stability. Earlier this year, Blackstone sold an approximately $3 billion block of LSE stock, monetizing more of the shares it received from the sale of Refinitiv. The acquisition is expected to maintain Nasdaq’s investment-grade status and will be followed by deleveraging as it reduces debt by 4.7 times earnings before interest, taxes, depreciation, and amortization (EBITDA) after the acquisition to a planned EBITDA of 3.3 times.
The Nasdaq will raise about $5.9 billion in new debt from a group of banks led by Goldman Sachs and JPMorgan to finance the Adenza purchase. Nasdaq said the purchase will “enhance” its growth, margins, and revenue quality and “deliver increased non-GAAP diluted earnings per share by the end of the second year.”
Expanding on The Nasdaq’s Acquisition of Adenza: The Move Towards Stable Revenue Streams
The Nasdaq’s acquisition of Adenza signifies a larger shift in the stock market towards stable revenue streams like data and risk management. While exchanges like Nasdaq itself might have started out as stock market trading platforms, low market volatility and surged competition mean that these platforms have had to adapt to remain relevant. Thus, the push for stable revenue streams that are less dependent on market conditions and potentially more lucrative.
With the booming fintech industry and increased digitalization in finance, it makes sense for stock exchanges to diversify. After all, the demand for software solutions that can help with regulatory compliance and risk management will only grow, which means that Nasdaq’s purchase of Adenza is a wise move in the long term. As we have seen, other stock exchanges have pursued a similar path to broaden their offerings and reduce their risks.
Take, for example, the LSE Group’s $27 billion cash and stock purchase of Refinitiv from Blackstone Group. That acquisition turned LSE into a powerful provider to hedge funds and investment groups using its financials. Blackstone Group has since sold an approximately $3 billion block of LSE stock, monetizing more of the shares it received from the sale of Refinitiv, which has become one of the most successful private equity deals in recent years.
Furthermore, as the market conditions continue to be uncertain, having stable revenue streams will protect Nasdaq from any future uncertainties that could arise. As more exchanges shift towards data and compliance solutions, the competition could get tighter. Therefore, it is necessary to acquire businesses that will complement Nasdaq’s strengths and value proposition.
Overall, the acquisition of Adenza by Nasdaq for $10.5 billion is an excellent move that speaks volumes about the current needs of stock exchanges globally. Nasdaq will now be able to complement its existing offerings and widen its scope in regulatory technology, compliance, and risk management, thus offering its clients enhanced solutions.
Summary
Nasdaq will acquire Adenza, a financial risk software company, for $10.5 billion in its largest takeover ever. The acquisition will significantly improve Nasdaq’s offerings in regulatory technology, compliance, and risk management, accounting for over 70% of its revenues. Adenza’s software is expected to generate $590 million in revenue and $300 million in free cash flow this year. Thoma Bravo, Adenza’s owner, is expected to receive $5.75 billion in Nasdaq cash and an approximately 15% equity stake in the company. The Nasdaq will fund the acquisition by raising about $5.9 billion in new debt from an array of banks. The acquisition is expected to enhance Nasdaq’s growth, margins, and revenue quality and deliver increased non-GAAP diluted earnings per share by the end of the second year.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
The Nasdaq is acquiring financial risk software company Adenza for $10.5 billion in its biggest takeover ever as the world’s large stock traders diversify away from transactions into more stable revenue streams like data and management of the risk.
The cash and stock acquisition is expected to “significantly” improve the Nasdaq’s offerings in regulatory technology, compliance and risk management, the company said. It comes as competitors like the London Stock Exchange Group and the Intercontinental Exchange bought out focused businesses on data and software.
“This is an outstanding opportunity to acquire a leading software company that enhances the Nasdaq’s position at the heart of the global financial system,” said Adena Friedman, chief executive officer of the Nasdaq.
Share to Nasdaq they were 8% lower in pre-market trading. The stock is down nearly 10% over the past six months, underperforming rival exchanges including ICE, CME Group and LSE, which gained between 5 and 17%.
Adenza’s software is used by large banks to manage post-crisis regulations and will be included in the Nasdaq’s “solutions” business which accounts for more than 70% of the New York-based group’s revenues. Adenza, which is owned by private equity firm Thoma Bravo, is expected to generate $590 million in revenue and $300 million in free cash flow this year, Nasdaq said.
Thoma Bravo, a buyout group specializing in software deals and managing $127 billion in assets, will receive a multi-billion dollar windfall from the sale.
The US-based investment group built Adenza by buying software company Calypso in 2021 for $3.7 billion and combining it with AxiomSL, a compliance software company it acquired in 2020 for a reported price of around $2. billions of dollars.
Thoma Bravo will receive $5.75 billion in Nasdaq cash and an approximately 15% equity stake in the company, valued at nearly $5 billion at current prices.
“We are excited to become a strategic shareholder of the Nasdaq,” said Holden Spaht, managing partner at Thoma Bravo who led the group’s investment. Spaht will also join the Nasdaq board of directors.
Other large exchange groups have bought assets from private equity firms in recent years in an effort to reduce their exposure to volatile trading conditions and create products as well as offer companies access to capital.
In the first quarter of this year, revenues from the Nasdaq’s solutions unit – where Adenza will sit – grew 5% and accounted for 71% of its $914 million net revenues, versus growth of 3%. for its trading business, which will be less than 25% of total revenue after the deal.
In 2020, Intercontinental Exchange, owner of the New York Stock Exchange acquired mortgage software specialist Thoma Bravo’s Ellie Mae for $11 billion, another deal led by Spaht, which has been one of the most successful private equity deals in recent years.
Trading groups are also becoming more comfortable using their stock to fund their growth.
LSE Group, the parent company of the London Stock Exchange, acquired Refinitiv, a $27 billion financial data and risk management business of Blackstone Group. LSE’s cash and stock purchase of Refinitiv turned LSE into a powerful provider to hedge funds and investment groups using its financials.
Earlier this year, Blackstone sold an approximately $3 billion block of LSE stock, monetizing more of the shares it received from the sale of Refinitiv, which has become one of the most profitable investments in its history.
The Nasdaq will raise about $5.9 billion in new debt from a group of banks led by Goldman Sachs and JPMorgan to finance the Adenza purchase.
The acquisition is expected to maintain the Nasdaq’s investment grade status and will be followed by deleveraging as it will reduce debt by 4.7 times earnings before interest, taxes, depreciation and amortization after the acquisition to a planned ebitda of 3.3 times.
Nasdaq said the purchase will “enhance” its growth, margins and revenue quality and “deliver increased non-GAAP diluted earnings per share by the end of the second year.”
https://www.ft.com/content/bf188909-6577-404b-89c2-79a8261e2e0e
—————————————————-