NASDAQ Stocks
NASDAQ to Acquire Philadelphia Stock Exchange
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Dec 7, 2007 - 3:54:17 PM

NASDAQ to Acquire Philadelphia Stock Exchange

The Nasdaq Stock Market, Inc. (NASDAQ (Nasdaq: NDAQ) announced that it has entered into a definitive agreement to acquire the Philadelphia Stock Exchange (PHLX). The acquisition of PHLX, the third largest options market in the U.S. and the nation's oldest stock exchange, significantly diversifies NASDAQ's product portfolio by providing NASDAQ with one of the premier options trading platforms in the U.S. This acquisition brings to NASDAQ an organization with a strong track record of building market share in a very competitive options marketplace, which has grown by more than 30% annually since 2003.

Under the terms of the agreement, NASDAQ will pay $652 million in cash consideration for the capital stock of the Philadelphia Stock Exchange. This transaction is expected to close in the first quarter of 2008 and to become accretive to 2009 earnings. The Board of Directors of each company unanimously approved the transaction and it is subject to other customary approvals.

No other exchange is better positioned for the future based on technology, products and overall passion for continuously redefining the definition and value of stock exchanges around the world. NASDAQ currently plans to preserve the Philadelphia Stock Exchange's market structure, continuing to operate the electronic options trading platform alongside the options trading floor in Philadelphia. A key asset in this transaction is PHLX's proprietary trading platform, which has demonstrated best in class capacity, speed and system reliability within the U.S. derivatives markets. As previously announced, NASDAQ will launch a separate, electronic price/time options trading system in December. Once the transaction closes, NASDAQ will be the only market offering customers both exchange models -- a market maker driven model and price/time order book model. As part of the transaction, the Philadelphia Stock Exchange's operations will become part of NASDAQ's Market Services business. Upon closing, NASDAQ will become the third largest options market in the U.S. with 15% of market share.

In addition to the options market, as part of the Philadelphia Stock Exchange acquisition, NASDAQ will acquire a futures market operated by the Philadelphia Board of Trade (PBOT), an equities business, and the Stock Clearing Corporation of Philadelphia (SCCP).