Summary
This Form 8-K filing from The Nasdaq Stock Market, Inc. (Nasdaq) on April 17, 2006, announces a significant strategic move: the agreement to acquire a minority stake in the London Stock Exchange plc (LSE). Nasdaq, through its subsidiary Nightingale Acquisition Limited, agreed to purchase approximately 14.99% of the LSE's issued share capital for approximately GBP 447.7 million (or $781.7 million). This acquisition, expected to close on April 18, 2006, represents Nasdaq's first direct equity investment in another major exchange and signals an intent to broaden its global reach and influence. To finance this acquisition, Nasdaq has entered into a substantial credit facility with Bank of America totaling up to $1.925 billion. This new facility will replace Nasdaq's existing credit agreement and includes a revolving credit facility, a senior term loan, and a secured term loan structured as a delayed-draw facility. The agreement also details various covenants, including financial ratios, limitations on dividends, debt, and acquisitions, and requires mandatory excess cash flow repayments starting in 2007. This filing provides key details for investors regarding Nasdaq's strategic international expansion and its financing arrangements.
Key Highlights
- 1Nasdaq to acquire a 14.99% minority stake in the London Stock Exchange (LSE) for approximately $781.7 million (GBP 447.7 million).
- 2The acquisition is being made through Nasdaq's wholly-owned subsidiary, Nightingale Acquisition Limited.
- 3The transaction is expected to close on April 18, 2006.
- 4Nasdaq has secured a new $1.925 billion senior secured financing facility from Bank of America (BOA Credit Facility) to fund the LSE acquisition.
- 5The BOA Credit Facility comprises a $75 million revolving credit facility, a $750 million senior term loan, and a $1.1 billion secured term loan.
- 6This new credit facility will replace Nasdaq's existing credit agreement, with approximately $748.1 million in borrowings to be repaid upon termination.
- 7The BOA Credit Facility is secured by substantially all of Nasdaq's and its subsidiaries' assets and includes customary affirmative and negative covenants, such as leverage and interest coverage ratios.