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Nasdaq to Sell U.S. Fixed-Income Business to Tradeweb for $190M

Nasdaq agreed to sell its U.S. fixed-income business for $190 million to an affiliate of electronic-marketplace operator Tradeweb Markets.
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Nasdaq  (NDAQ)  said Tuesday that it had agreed to sell its U.S. fixed-income business for $190 million cash to an affiliate of electronic marketplace operator Tradeweb Markets  (TW) .

New York-based Nasdaq at last check was up 2% to $141.36, while Tradeweb rose 2.9% to $66.34.

The companies hope to close the deal this year. It's subject to conditions including regulatory clearances. 

The Financial Times reported that Nasdaq bought the business, known as eSpeed, in 2013 from BGC Partners  (BGCP)  for an initial $750 million, to enter electronic trading of U.S. Treasury securities, one of the world’s biggest and most important markets.

Nasdaq said in a statement that the decision to sell Nasdaq Fixed Income aligns with its strategy to concentrate resources and capital on providing technology and analytics to the capital markets worldwide.

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Nasdaq Fixed Income contributed about $23 million in revenue in calendar 2020.

Nasdaq said it has a contingent obligation to issue 992,247 of its common shares to BGC Partners or its assignees every year through 2027 according to the original agreement when Nasdaq acquired the business.

When the sale to Tradeweb closes, the number of Nasdaq shares subject to this obligation will fall and the issuance will be accelerated. That would mean issuance to BGC or its assignees of 6.2 million shares of Nasdaq in 2021. 

Nasdaq said that it intended to use the proceeds from the sale of the fixed-income business, available tax benefits and NFI working and clearing capital, as well as other sources of cash, to buy back shares and offset the dilution to adjusted earnings.

The proceeds from the sale, the remaining tax benefits related to the 2013 purchase, and the working and clearing capital to be released when the deal closes are estimated at $700 million.

Nasdaq’s board authorized management to add $1 billion to its buyback program, subject to the deal closing and to the accelerated share issuance to BGC.