Nasdaq Stock Market agreed to acquire Instinet Group for $1.9 billion in cash and at the same time agreed to sell Instinet's institutional brokerage unit to private equity firm Silver Lake Partners for $207.5 million, according to Nasdaq president and CEO Bob Griefeld. In addition, Bank of New York agreed to acquire Instinet's soft-dollar broker Lynch, Jones & Ryan for $174 million. When the deals are complete, Nasdaq will own INET ECN, Instinet's electronic trading platform.
Instinet shareholders will receive $5.44 a share for the deal. London-based Reuters Group is the majority shareholder of Instinet Group.
"This transaction will position us to offer investors increased choice in the trading of stocks listed on other markets," Mr. Griefeld said today at a news conference announcing the deal. "It also provides increased liquidity and time priority for stocks listed on the Nasdaq stock market."
Instinet CEO Ed Nicholl will become CEO of the institutional brokerage unit.
"We look forward to being an independent company focused on the needs of large institutions," he said at the news conference. "We believe that with Silver Lake's help, we can continue to build on the legacy of Instinet."
The Nasdaq-Instinet deal comes just two days after the New York Stock Exchange and electronic trading firm Archipelago Holdings Inc. agreed to merge to create a new publicly traded company called NYSE Group Inc.