Nasdaq, Inc. (NASDAQ:NDAQ) recently completed the acquisition of International Securities Exchange (“ISE”) from Deutsche Börse Group. This acquisition will enable Nasdaq to enhance efficiencies for clients, ramp up its technology offering as well as innovate and experiment in the equity options industry.
Nasdaq entered into an agreement to purchase ISE on Mar 9, 2016 and planned to pay in cash or debt for the buyout.
ISE operates through three electronic option exchanges, namely ISE, ISE Gemini and ISE Mercury. These three exchanges serve as the housing for more than 15% of trading in the U.S. options. The completion of this deal will allow both the acquirer and ISE to offer competitive pricing and improve the trading process. ISE’s clients will now receive a more sophisticated and improved trading experience through Nasdaq’s renowned INET technology and multicore system.
The equities options business is the most important aspect of Nasdaq’s long-term strategy. The latest deal will complement and strengthen the acquirer’s business. The completion of the transaction will mark the beginning of the operation of PrecISE Trade. This latest offering will function as a front-end order and execution management system for trading options and stock-option combinations.
Nasdaq anticipates around $40 million in annualized expense synergies from the takeover. Further, the company expects the deal to be accretive within a year of closing and generate superior returns on capital.
Nasdaq has been prudently expanding its portfolio through strategic acquisitions. To this end, on Mar 21, 2016, the Zacks Rank #4 (Sell) securities exchange inked a deal to acquire leading board portal solution provider, Boardvantage, for $200 million. This acquisition is expected to improve communication between the boards of the two companies as well as enhance workflow and decision making for clients via highly secure and superior technology, service and productivity tools.
Stocks to Consider
Some better-ranked stocks from the finance sector are Bats Global Markets (NYSE:BATS) , Markel Corp. (NYSE:MKL) and National General Holdings Corp. (NASDAQ:NGHC) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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