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In reaching this conclusion, the Board has reviewed Third Avenue's letter, considered the terms of its April 22, 2005 merger agreement with The Nasdaq Stock Market, Inc. and had discussions with Nasdaq with respect to the Third Avenue proposal.
Under the Instinet-Nasdaq merger agreement, Nasdaq has agreed to acquire 100% of Instinet Group for approximately $1.878 billion in cash, or approximately $5.44 per share. That agreement contains specific, binding provisions limiting Instinet's ability to consider alternative transactions, such as the one proposed by Third Avenue. Third Avenue's proposal, by its terms, is not a proposal to acquire 100% of Instinet Group, but only one of its businesses, and requires Nasdaq's participation. For this reason, among others, the proposal is not reasonably likely to constitute a "superior proposal" as defined in the Nasdaq merger agreement, and therefore Instinet is not in a position to further pursue it.
The Instinet Board also notes that Third Avenue's proposal is not a firm offer but rather is a conditional proposal subject, among other things, to "due diligence to its satisfaction." It relates to the business that Nasdaq has agreed, immediately following the Instinet merger, to sell to an affiliate of Silver Lake Partners L.P. Nasdaq's agreement with Silver Lake does not permit Nasdaq to sell that business to a different party.
The Board noted that the Nasdaq merger agreement is the result of an extended, six-month sale process, which was the subject of press statements and widely published reports. Third Avenue, an Instinet Group shareholder, chose not to participate in this process, although numerous other parties, both solicited and unsolicited, did. After this extensive process, and taking into account all offers and indications of interest and giving due consideration to any potential conflicts of interest presented by management's participation in Silver Lake's proposed purchase from Nasdaq, the Board determined that the Nasdaq offer was the best value reasonably available to all shareholders. These matters will be further described in the company's proxy statement relating to the Nasdaq merger, which it expects to file shortly with the Securities and Exchange Commission.
The Instinet Board of Directors remains squarely focused on maximizing Instinet shareholder value as well as complying with Instinet's contractual obligations.
