Nasdaq, Inc., the operator of the world’s second largest stock exchange, Nasdaq, said today (June 12) it has agreed to buy fintech software maker Adenza for $10.5 billion in a cash-and-stock deal. It’s the largest acquisition in Nasdaq’s history and a key milestone in its CEO Adena Friedman’s ambition to diversify the financial services company away from securities trading.
Nasdaq will buy Adenza from its current owner, the private equity group Thoma Bravo. The transaction, expected to close in six to nine months, will give Thoma Bravo 14.9 percent of Nasdaq’s outstanding shares and make the private equity firm one of its largest shareholders. Holden Spaht, a managing partner at Thoma Bravo, will join Nasdaq’s board upon the deal’s completion.
Based in London and New York, Adenza provides software to help manage trading, risk and post-trade processing in currencies, fixed income and derivatives markets. Its technology also streamlines the process of reporting data to regulators. Adenza says its clients include the majority of banks that regulators have deemed systemically important.
How Nasdaq makes money
Nasdaq, which stands for National Association of Securities Dealers Automated Quotations, was founded in 1971 and is the world’s largest securities marketplace that solely relies on electronic trading.
Aside from its namesake exchange, Nasdaq, Inc. operates nine other securities exchanges—two in the U.S. and seven in Europe—that it has acquired over the years.
Nasdaq generates revenue by charging transaction fees to brokerages, asset managers and market makers, as well as selling market data to asset managers and providing brokers with software to detect market manipulation.
In 2022, Nasdaq, Inc. generated $3.6 billion in net revenue, 28 percent of which came from trading. The acquisition of Adenza is expected to further diversify Nasdaq’s revenue away from trading, the company said, in line with Friedman’s goal of transforming it into a tech company.
CEO Adena Friedman’s vision
“This is an incredibly exciting deal for us as we continue to transform the company into a leading technology company that serves the industry,” Friedman told the Wall Street Journal. For example, owning Adenza will allow Nasdaq to sell anticrime services provided by Verafin, another subsidiary it acquired in 2020, to a broader array of banks, Friedman said.
Friedman, a former executive at private equity group Carlyle, took the helm of Nasdaq in 2017, replacing Robert Greifeld. Under her reign, Nasdaq continued the acquisition spree that begin in 2005 when new SEC regulations opened the equities trading market to competition from brokers.
Between 2005 and 2006, Nasdaq attempted to acquire the London Stock Exchange Group twice but both offers were rejected. In 2007, Nasdaq bought the Boston Stock Exchange and the Philadelphia Stock Change. The same year, it acquired OMX, a securities market operator in Europe’s Nordic and Baltic regions, for $3.7 billion and later formed Nasdaq Nordic. In 2015, the company bought the International Securities Exchange for $1.1 billion. And in 2020, Friedman led the $2.75 billion acquisition of Verafin, a software company that helps banks detect money laundering and fraud.
