Nasdaq, Inc. · NASDAQ:NDAQ
Nasdaq — Nasdaq Stock Market — Merger or Acquisition (April 2005)
23 slides from Nasdaq's merger presentation, Apr 25, 2005
Slide 1: INET Acquisition Announcement
The NASDAQ Stock Market 1,798,495,439 NASDAQ INET Acquisition Announcement April 25, 2005 The best market for companies. The best market for shareholders.
Slide 2: Forward Looking Statement
Forward Looking Statement Forward-looking statements in this Investor Presentation are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements
Slide 3: Agenda
Agenda Earnings and Guidance Update Transaction Summary Company Overview Transaction Rationale Integration Plan Capital Structure Conclusion
Slide 4: Quarterly Earnings and Guidance Update
Quarterly Earnings and Guidance Update ($ in millions, except per share values) Q1 Results FY 2005 Guidance Gross Margin $126.3 $480 - $490 Total Expenses $103.5 $408 - $418 Net Income $12.7 $38 - $44 EPS (Basic) $0.14 $0.38 - $0.46 Pre-tax Charges Associated with Cost Reduction Program $7.5 $22 - $
Slide 5: Transaction Summary
Transaction Summary Instinet Group INSTINET THE UNCONFLICTED INSTITUTIONAL BROKER Purchased By SLP Silver Lake Partners $207.5 Million inet Purchased By $934.5 Million LJR LYNCH JONES & RYAN Purchased By The BANK of NEWYORK. $174 Million + $562 million Excess Cash on Hand = $1.878 billion to Instine
Slide 6: Transaction Summary
Transaction Summary Acquisition of INET ECN by Nasdaq Simultaneous transaction: Instinet sells LJR for $174 million on or before the closing of Nasdaq’s purchase Nasdaq purchases remaining Instinet Group for $1.878 billion Nasdaq sells Instinet Institutional Brokerage to Silver Lake Partners for $20
Slide 7: Transaction Summary
Transaction Summary Step 1: Initial Organization Instinet Shareholders Instinet Group, Inc. ECN Holdings LJR VAB LJR Buyer SLP Nasdaq Step 2: Distribution of Cash LJR Buyer SLP $174mm $207.5mm Instinet Group, Inc. Nasdaq $562mm $174mm $207.5mm $934.5mm Instinet Shareholders Total: $1,878mm Step 3: S
Slide 8: Transaction Summary: Final Structure
Transaction Summary Final Structure NASDAQ® + inet = The premier equities marketplace The electronic marketplace Superior execution opportunities for customers Consolidation on to one trading platform in same timeframe as standalone Efficient combined company with low cost structure to deliver retur
Slide 9: Financial Summary
Financial Summary NASDAQ® inet NASDAQ® Pro Forma 2004 Net Revenue $484.6 $112.8 (1) $597.4 2004 Net Income 11.4 20.3(2) 31.7 2004 Net Income to Common ($1.8) $20.3(2) $18.5 (1) Net of rebates, soft dollars, brokerage and clearing costs (2) Assumes 40% tax rate.
Slide 10: Annual Total Expenses
Annual Total Expenses ($ in millions) This is the expense reduction chart shown on our roadshow in February of 2005, updated for our 2005 expense guidance We believe we will still achieve these levels of expenses in 2006 and 2007, even with the acquisition of INET ECN Annual Expenses(1) $900 $800 $7
Slide 11: Value Creation
Value Creation Accretive in first 12 months through very achievable cost synergies Significant accretion thereafter from over $100 million in annual synergies: - Technology savings - Clearing - Corporate Overhead - Revenue synergies from market data products Nasdaq will consolidate on to one platfor
Slide 12: Diverse Revenue Streams
Diverse Revenue Streams INET ECN is primarily a transaction based business, but we will remain diverse in our revenue stream NASDAQ 2004 78% 22% Pro Forma 2004 69% 31% Transaction Services Recurring Source: Company filings as of 12/31/04. Note: Pro Forma results do not include potential synergies.
Slide 13: Integration
Integration Proven integration capabilities given successful Brut acquisition We are confident in our ability to integrate on a large scale We acquired Brut in Q3 2004, and reduced costs and headcount the next quarter One trading platform within 12 months Nasdaq is in the middle of our own strategic
Slide 14: Sources and Uses and Nasdaq Capitalization
Sources and Uses and Nasdaq Capitalization Sources of Funds Amount Cash from Balance Sheet $ 87.5 Debt 702.3 Convertible Note 205.0 Total Sources of Funds $ 994.8 Uses of Funds Amount Instinet ECN Common Equity $ 934.5 Existing NASDAQ Senior Debt 25.0 Financing/Transaction Fees 35.3 Total Uses of Fu
Slide 15: Equity Financing
Equity Financing Two premier private equity firms are investing in Nasdaq in order to partially fund the purchase of INET ECN H&F has reinvested its existing Convertible Notes and will commit an additional $60 million to NASDAQ Silver Lake Partners is investing $145 million in NASDAQ in the form of
Slide 16: Structure of Equity Financing
Structure of Equity Financing The Senior Convertible Notes have been issued in order to achieve certainty of financing Nasdaq has issued new convertible notes to H&F and Silver Lake; Nasdaq has a call option on the notes if the transaction does not close $205 million is held in escrow; upon closing
Slide 17: Conclusion
Conclusion Nasdaq purchases Instinet ECN for $934.5 million Institutional & Retail Investors will benefit from increased competition Creates efficient company positioned to compete with NYSE in a post NMS world New investment in Nasdaq by Silver Lake Partners, re-investment from Hellman & Friedman S
Slide 18: Appendix
Appendix 1,798,495,439 NASDAQ The best market for companies. The best market for shareholders.
Slide 19: NASDAQ Investment Highlights
NASDAQ Investment Highlights Premier U.S. Equities Marketplace Building Strong Operating Leverage Successful Cost Reduction Strategy Industry-Leading Technology Diverse and Recurring Revenue Streams Strategy in Place Designed to Drive Profitable Growth Experienced, Innovative Management Team Premier
Slide 20: The NASDAQ Stock Market
The NASDAQ Stock Market - - Who We Are Issuer Services (42.5% of 2004 Gross Margin) What We Do List shares of approximately 3,250 public issuers Trademark financial products, including NASDAQ-100 (QQQ) Provide information services and products to listed companies Revenue Generation Listing, annual r
Slide 21: Premier U.S. Marketplace
Premier U.S. Marketplace Strong Brand and Reputation Trusted brand name among market participants, institutions and public companies Home to the Nasdaq-100 index, the basis of the QQQs ETF, the most heavily traded listed equity security in the United States Premier equity listing venue for both indu
Slide 22: Premier U.S. Marketplace: Superior Trade Capabilities
Premier U.S. Marketplace Superior Trade Capabilities(1) Faster Trades Tighter Spreads Execution Certainty seconds 14.7 13.2 NASDAQ NYSE 1.59 cents 0.90 NASDAQ NYSE 100% 92.4% at or inside 85.1% Executed % 0% NASDAQ NYSE NASDAQ is 11.4% faster NASDAQ is 76.7% better NASDAQ is 7.3% better Source: Mark
Slide 23: The Equity Market Opportunity
The Equity Market Opportunity Both IPO and Trading Volume Showing Positive Momentum Total IPOs Total Shares Traded (BN) NASDAQ NYSE AMEX NASDAQ NYSE AMEX Source: Thomson. Source: NYSE, NASDAQ and AMEX websites.
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