Hellman & Friedman will buy $240 million of debentures, convertible into Nasdaq common stock at any time during the next five years. Following the transaction, on an as converted basis, Hellman & Friedman will own approximately 9.8 percent of Nasdaq and, subject to S.E.C. and shareholder approval, will be able to vote on all matters for which shareholders have the right to vote, subject to an existing 5.0 percent voting limitation. In connection with the transaction, Warren Hellman, Chairman of Hellman & Friedman will become a member of the Nasdaq Board of Directors.
Over the last year, Nasdaq and the NASD raised over $516 million in a two-part private offering to Nasdaq’s market participants, issuers, and the NASD membership. A key goal of the Nasdaq restructuring is to realign strategically Nasdaq’s ownership and reduce the NASD’s ownership in Nasdaq. To help reach that goal, Nasdaq intends to use substantially all of the cash raised through the Hellman & Friedman investment to repurchase Nasdaq shares from the NASD, reducing the NASD’s ownership in Nasdaq to approximately 27 percent, on a fully diluted basis.
"Hellman & Friedman’s investment is an important next step in Nasdaq’s transformation into an independent, for-profit, global exchange," said Frank G. Zarb, Nasdaq’s Chairman. "Hellman & Friedman pursues a disciplined investment philosophy, and we view this investment as a further vote of confidence in the compelling logic of Nasdaq’s plan to grow in the rapidly evolving securities marketplace." Zarb said.
"A new capital structure for Nasdaq is good for individual and institutional investors, good for listed companies, and good for Nasdaq," Zarb continued. "It will further enhance our ability to accelerate several key initiatives, which include SuperMontageSM as well as alliances in Europe and Asia. These initiatives are designed to increase market liquidity, broaden access to high-quality information, and streamline order execution and processing on a global scale."
Warren Hellman said, "Simply put, Nasdaq is a great business and a classic H&F investment. Our investment philosophy places great emphasis on superior management teams, an extraordinary franchise, and growing revenue streams. Nasdaq has it all. Nasdaq’s growth rates and compelling opportunities for international expansion further underscore the underlying value we see in this franchise."
Patrick Healy, Managing Director of Hellman & Friedman added, "Nasdaq is the fastest growing major stock market in the world and home to over half of the companies traded on the primary U.S. markets. We are delighted to invest in this dynamic market that provides extraordinary depth and liquidity to leading companies worldwide through advanced trading platforms and technologies."
Wick Simmons, Nasdaq’s Chief Executive Officer said, "We welcome Hellman & Friedman as a partner during this transitional period in Nasdaq’s development. Hellman & Friedman’s financial acumen and international experience will prove extremely valuable as we deploy new-generation trading technologies and expand our global presence. Hellman & Friedman has a successful track record as a long-term investor, helping companies strengthen their business, enhance performance, and achieve long-term goals. With expertise in financial services, media, telecommunications, software and technology-based services, Hellman & Friedman also adds a special understanding of the companies Nasdaq frequently serves."
"We also look forward to welcoming Warren Hellman to the Nasdaq Board of Directors," Simmons added. "Warren has a well-established reputation as a leader in the investment community and his wealth of experience will be a vitally important asset to Nasdaq as we enter this new phase in our growth."
Robert R. Glauber, Chief Executive Officer and President of the NASD, said, "This investment by Hellman & Friedman is another important step toward fully separating the NASD from Nasdaq. That will allow the NASD to focus on its primary mission of achieving the most efficient, liquid, transparent and fair securities markets in the world -- so that investors trust and use our markets."
Glauber added, "As noted before, it is our goal to eventually and in an orderly way separate completely from Nasdaq and have no ownership stake. This is an important step toward that goal."
Hellman & Friedman LLC is a San Francisco-based private equity investment firm. Since its founding in 1984, the firm has raised and managed more than $4.7 billion of committed capital. Hellman & Friedman’s strategy is to invest in superior business franchises and to be a knowledgeable, value-added, and flexible investor in select service industries such as media and content, professional services, software and information services, financial services, and communications. Hellman & Friedman seeks to be the partner of choice for world-class management teams in growing businesses. Representative investments include Young & Rubicam, Inc.; Formula One Holdings, Ltd.; Western Wireless Corporation; VoiceStream Wireless Corporation; Franklin Resources, Inc.; Eller Media Company, Inc.; Digitas Inc.; and others. For more information on Hellman & Friedman, visit www.hf.com.
The Nasdaq Stock Market lists nearly 5,000 companies, has a larger dollar volume, and trades more shares per day than any other U.S. market. For more information about Nasdaq and Nasdaq Europe, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.
