8-KFinancial EventsOther EventsExhibits & Filings

NASDAQ, INC. 8-K Report, Material Impairment (Dec 22, 2009)

Filed December 22, 2009For Securities:NDAQ

Summary

The NASDAQ OMX Group, Inc. (NDAQ) filed an 8-K on December 22, 2009, reporting a significant corporate action involving its investment in NASDAQ Dubai Limited. The company has agreed to a realignment of ownership where its 33 1/3% stake in NASDAQ Dubai will be transferred to Dubai Financial Market PJSC (DFM), making NASDAQ Dubai a wholly-owned subsidiary of DFM. In exchange, NDAQ will receive a 1% equity interest in DFM and will be relieved of its obligation to contribute up to $25 million in additional capital to NASDAQ Dubai. This transaction is accompanied by a substantial pre-tax, non-cash impairment charge estimated at $81 million related to the NASDAQ Dubai investment, reflecting a reassessment of its carrying value. The technology and trademark licensing agreements with NASDAQ Dubai and Borse Dubai will remain in place.

Key Highlights

  • 1NASDAQ OMX (NDAQ) is exiting its equity stake in NASDAQ Dubai Limited as part of an ownership realignment.
  • 2NDAQ will receive a 1% equity interest in Dubai Financial Market PJSC (DFM) in exchange for its NASDAQ Dubai stake.
  • 3NDAQ will be released from its obligation to provide up to $25 million in additional capital to NASDAQ Dubai.
  • 4The company will record an estimated $81 million pre-tax, non-cash impairment charge related to this investment.
  • 5Existing technology and trademark licensing agreements with Borse Dubai and NASDAQ Dubai will continue unchanged.
  • 6The transaction is expected to result in a future gain or loss on NDAQ's DFM investment based on market conditions.
  • 7The filing was prompted by the board's approval on December 16, 2009, and the subsequent agreement on December 22, 2009.

Frequently Asked Questions

This 8-K filing announces NASDAQ OMX Group's (NDAQ) agreement to a significant restructuring of its investment in NASDAQ Dubai Limited. NDAQ is exiting its equity stake in NASDAQ Dubai in exchange for a stake in Dubai Financial Market PJSC (DFM).

The transaction triggers an estimated $81 million pre-tax, non-cash impairment charge. While this is a substantial write-down, NDAQ will also gain a 1% equity interest in DFM and be relieved of a $25 million capital contribution obligation.

NDAQ's technology and trademark licensing agreements with Borse Dubai and NASDAQ Dubai will remain in effect, suggesting that core operational relationships related to these agreements will not be disrupted. The primary impact is on the investment portfolio.

As of December 21, 2009, a 1% ownership interest in DFM was valued at approximately $39 million. The final gain or loss on this stake will depend on its market price when the transaction is completed and the carrying value of NDAQ's original NASDAQ Dubai investment.