Nasdaq Stock Market said today that it's offered to acquire the Philadelphia Stock Exchange for $652 million in cash. The deal is expected to close in the first quarter of 2008, pending regulatory and shareholder approval. Nasdaq will gain Philadelphia Stock Exchange's options market, a futures market operated by the Philadelphia Board of Trade, the Stock Clearing Corp. of Philadelphia, and an equities business.
The acquisition is expected to become accretive to Nasdaq's earnings beginning in 2009. Brokerage firm Thomas Weisel believes that earnings could grow by 5 to 10 cents per share on an annualized basis, and notes, The acquisition will accelerate Nasdaq's entry into the options market and facilitate market share growth within Philadelphia's existing pool of liquidity. Meanwhile, Friedman Billings Ramsey believes that 2008 earnings could grow by 8% to 11% as a result of the deal.
After gaining more than 2% in yesterday's session, NDAQ is down fractionally as the opening bell approaches. The equity has performed strongly since snapping out of some short-term doldrums in late August, and has since raced higher along support from its 10-day moving average. However, analysts remain skeptical Zacks reports that the stock has 11 hold ratings, compared to just 2 buys.