Nasdaq OMX Group Soars With a Smart Acquisition

Shares of Nasdaq OMX Group Inc. (NASDAQ:NDAQ) closed up 3.76 percent on Wednesday after announcing that it would acquire the Investor Relations, Public Relations, and Multimedia Solutions businesses from Thomson Reuters Corporation (NYSE:TRI) for $390 million in cash. Shares of Thomson Reuters were up about 1.5 percent.

Why This Deal, and Why Now?

“In one acquisition, we accelerate and achieve our Corporate Solutions long-term objectives, while maintaining our balanced strategy of delivering value to shareholders,” said Nasdaq OMX CEO Bob Greifeld in a statement.

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Nasdaq OMX already earns over 70 percent of its revenue from non-transaction services, but the company is still clearly trying to diversify itself. Shares have come down over 5.5 percent this year to date, and the acquisition could add as much as $234 million in annual revenue from its corporate solutions services, based on the combined revenue from the units in the 12 months ended September 30. Cost savings as a result of the deal are estimated at $35 million annually over the next three years.

For its part, Thomson Reuters is “rejiggering assets in its portfolio,” according to a Reuters report. Shares of Thomson Reuters have only grown about 5.8 percent this year to date.

What Will Thomson Reuters Do With the Cash?

Despite Pearson’s (NYSE:PSO) CFO denying the rumors, there has been a lot of speculation that the Financial Times could be up for sale in the near future. The FT has been valued at about $1.2 billion, well within the reach of both Bloomberg and Thomson Reuters. On the completion of the sale to Nasdaq OMX, Thomson Reuters would have a big enough war chest to make a cash offer, if it wanted.

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