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Nasdaq buys trading and risk management firm Adenza for $10.5B

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Jun 12, 2023
Illustration of two people shaking hands on a giant stack of money.

Illustration: Aïda Amer/Axios

Nasdaq (Nasdaq: NDAQ) has agreed to acquire Thoma Bravo-controlled Adenza — which makes software used by banks and brokerages for trading, treasury and risk management — for $10.5 billion in cash and stock.

Why it matters: It's the largest acquisition in Nasdaq’s history, and the deal bolsters the firm’s attempt to secure more predictable recurring revenues.

Details: The $10.5 billion deal comprises $5.75 billion in cash and 85.6 million shares of Nasdaq common stock.

  • Nasdaq plans to issue about $5.9 billion of debt to fund the cash component.
  • The deal is expected to close in six to nine months.

Between the lines: The acquisition highlights Nasdaq CEO Adena Friedman’s efforts to diversify the exchange’s revenue and transform it into a technology provider for the financial services industry.

  • Roughly 80% of Adenza’s revenue is recurring, and it has a 15% organic revenue growth forecast for the year.
  • Adenza is expected to generate $590 million of revenue this year and add $300 million in pre-tax cash flow.
  • Moreover, its addition is expected to boost Nasdaq’s Solutions Businesses sales as a percentage of total revenue from 71% in Q1 to 77% by year-end, and to raise its ARR as a percentage of total revenue from 56% to 60% in the same period.

Flashback: Adenza was formed through the 2021 merger of Calypso Technology, which made trading and capital markets software, with regulatory and risk management specialist AxiomSL.

  • When Thoma Bravo acquired a majority stake in AxiomSL in October 2020, the company was said to be valued at around $2 billion.
  • Meanwhile, it was reported that Calypso was valued at about $3.75 billion when the private equity firm acquired it the following year.

Of note: Thoma Bravo will own 14.9% of Nasdaq’s outstanding shares upon completion, making it one of the exchange’s largest shareholders.

  • Managing partner Holden Spaht will join Nasdaq’s board of directors at the close of the deal.
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