What is the main purpose of this 8-K filing?

This 8-K filing announces Nasdaq's definitive agreement to acquire Instinet Group Incorporated. It details the terms of the merger, the concurrent sale of Instinet's brokerage business, the financing structure for the acquisition, and related agreements.

How is Nasdaq financing the acquisition of Instinet?

The acquisition is being financed through a combination of Nasdaq's cash on hand, proceeds from the sale of Instinet's subsidiary Lynch, Jones & Ryan, and the issuance of new debt and equity instruments. Specifically, Nasdaq is issuing Series A Convertible Notes and warrants to Norway Acquisition SPV for $205 million and exchanging existing notes for Series B Convertible Notes and warrants with Hellman & Friedman totaling $240 million. A $205 million secured term loan is also part of the financing structure.

What are the key conditions for the completion of the Instinet acquisition?

The completion of the merger is subject to several conditions, including the successful sale of Instinet's institutional brokerage business, approval by Instinet's shareholders, regulatory approvals (including the SEC and Hart-Scott-Rodino Antitrust), and other customary closing conditions.

What rights do Silver Lake Partners and Hellman & Friedman have as a result of this transaction?

As a result of their significant investment and financing, Silver Lake Partners and Hellman & Friedman have secured board representation. They also have certain information and consultation rights with Nasdaq, as outlined in the Amended Securityholders Agreement, provided they maintain a certain ownership threshold of the issued notes.

NDAQ 8-K: Leadership Changes, Material Agreements & More

Summary

This Form 8-K filing by The Nasdaq Stock Market, Inc. (Nasdaq) on April 28, 2005, announces a significant strategic acquisition and related financing. Nasdaq is acquiring Instinet Group Incorporated for approximately $1.878 billion in cash. The transaction involves the immediate sale of Instinet's institutional brokerage business to Iceland Acquisition Corp., an affiliate of Silver Lake Partners, for $207.5 million. This structured acquisition aims to integrate Instinet's ECN business, Inet ECN, into Nasdaq's operations while divesting the brokerage arm. The substantial acquisition is financed through a combination of cash on hand, proceeds from the sale of Instinet's Lynch, Jones & Ryan subsidiary, and the issuance of new convertible notes and warrants to private equity firms Silver Lake Partners (SLP) and Hellman & Friedman (H&F). These financing arrangements include $205 million in Series A Convertible Notes and warrants sold to Norway Acquisition SPV (indirectly owned by SLP and H&F), and an exchange of existing notes for $240 million in Series B Convertible Notes and warrants with H&F. The company also secured a $205 million term loan facility to fund its purchase of the Series A notes and warrants.

Key Highlights

1Nasdaq to acquire Instinet Group Inc. for approximately $1.878 billion in cash.
2Instinet's institutional brokerage business to be sold to Iceland Acquisition Corp. (an SLP affiliate) for $207.5 million concurrently with the merger.
3The acquisition of Instinet is expected to be completed by Q4 2005 or Q1 2006, subject to regulatory and shareholder approvals.
4Financing includes $205 million in Series A Convertible Notes and warrants issued to Norway Acquisition SPV (SLP/H&F), and $240 million in Series B Convertible Notes and warrants exchanged with H&F.
5A $205 million secured term loan was arranged to facilitate the financing of the Series A Notes and Warrants.
6Private equity firms Silver Lake Partners and Hellman & Friedman will have board representation and certain rights through a Securityholders Agreement.
7Nasdaq plans to hold a stockholder meeting to approve amendments to its charter, which may impact voting rights associated with the new convertible notes.

NASDAQ, INC. 8-K Report, Material Agreement (Apr 28, 2005)

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Key Highlights

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