Instinet Group


said Thursday that after considering the proposal from Third Avenue Management to buy its institutional brokerage business, the company's board decided the pending merger with the

Nasdaq Stock Market


is in the best interests of its shareholders.

Nasdaq has agreed to acquire Instinet Group for about $1.88 billion in cash, or $5.44 a share. The agreement contains binding provisions limiting Instinet's ability to consider alternative transactions, such as the one proposed by Third Avenue.

Under an agreement reached earlier this year, Nasdaq plans to buy Instinet's electronic trading platform, while the institutional brokerage unit will be sold to Silver Lake Partners. Instinet said Wednesday that it had received a letter from Third Avenue, an investment firm based in New York, proposing the acquisition of the brokerage operation.

Shares of Instinet slipped 2 cents to $5.32 in after-hours trading.